Dream of property abroad dies as sales fall 26pc Mike Boles, a director at Savills Private Finance, the mortgage broker, said British buyers had become nervous about overseas property. Many are afraid it might be difficult to sell a foreign property if needed, as the housing markets in some European countries have practically stagnated. Others are held back by tighter lending criteria. In Britain, increasing a mortgage to use as a deposit on a holiday house has become more difficult since the 2008 credit crisis. Mortgage lenders in countries such as Spain and Portugal, where local economies have been savaged by the eurozone debt crisis, have become reluctant to lend to non-residents. Mr Boles said: "It is very difficult to get a mortgage locally in places such as Spain and Portugal. There is still some way to go before lenders will offer more deals to UK residents. Pension incomes are also down, dashing dreams of retiring abroad for many. Payout rates have fallen from around £15,000 on each £100,000 in the early Nineties to around £6,000 today for a healthy 65-year-old. However, finance is more readily available in France, which Mr Boles said contributed to the country's rise in popularity among British investors. He said France and Switzerland had garnered the most interest as mortgage rates were low. Phil Schofield of insurer Schofields said French property was a safer investment than neighbouring markets. "Good transport links also make France an attractive option and many buy to eventually retire there," he said. By contrast, the Spanish and Greek property markets have been afflicted by stories of "illegal" properties being demolished and resorts being left unfinished. British buyers have in some cases bought houses built and sold without planning permission. Prices in France have remained stable over the past five years, recording modest growth of 0.9pc. But this has not been the case in southern Europe, where prices have tumbled. Spanish property values are almost 28pc below their 2008 levels. In Italy, prices are down 14.6pc, according to estate agent Knight Frank. Greece has suffered falls of 31pc, and Portugal 11.4pc. Some have seen the falls as an opportunity to secure a bargain. Phil Hoey, of currency exchange firm Caxton FX, said it was a buyers" market. Those who are venturing into the eurozone have been able to push prices below market value. Others warn some markets are still overvalued. A study by the Organisation for Economic Cooperation & Development in May suggested property in France, Spain and Italy was priced too high. Houses in Greece, Portugal and Ireland were undervalued. James Price, head of international development at Knight Frank, said the market had picked up in the past few months as confidence in the UK economy grew. He said: "Prices will remain fairly constant in Europe for the next couple of years - we have seen the big decreases already and confidence is returning." Rightmove's overseas division said it had had a 30pc increase in inquiries in the past 12 months. This month, the European Central Bank cut interest rates from 0.5pc to a record low of 0.25pc to head off deflation. The move triggered a fall in the euro, which is beneficial for UK investors. Mr Boles said: "The euro will go down against sterling as the UK's economy recovers, so investors will get more for their money. More people will see value in overseas property and the market will pick up again. It will take time, though - at the moment there is a fear that prices could still go down in places like Spain, for example. Sign up to our newsletter for all the latest personal finance news