Heat is on Brits' homes in the sun

AS IF rising mortgage repayments and the early signs of a downturn in the UK housing market were not enough for homeowners to fret about, that other favourite real estate market for Brits - the Costa del Sol - is showing signs of distress.

After a two-year bull run fuelled by Brits looking for a place in the sun, experts say prices for villas on the southern Spanish coast from Malaga to Marbella are topping out.

The warning that the cost of a quality property on the Costa has become unaffordable comes from the largest owner of UK estate agents, Countrywide, whose chairman Christopher Sporborg reckons the British are now going to the Costa Blanca to get more for their money.

He said: 'Prices along the Costa del Sol have gone up at least 20% in the past year and have peaked. The average decent holiday home can go for e800,000 (£538,000) - that is expensive for our sort of Mr and Mrs Average Buyer - compared to €200,000 for something similar on the Costa Blanca.'

Countrywide, owner of the Bairstow Eves and Mann chains of estate agents among others, makes regular airline seat block bookings to help 'facilitate viewing in Spain', Sporborg said, with potential buyers staying four nights to view via its H2O Homes Overseas brand.

A recent H2O Spanish promotion in Manchester had potential buyers looking for 'the cheaper houses', he added.

Property prices during the first quarter of 2004 rose 21% year-on-year in Andalucia, the southern region that includes the Costa del Sol, according to Spain's biggest surveyors Tinsa, against 13% in Madrid.

Neil Hesketh, director of Andalucian Dream Homes, specialising in smaller, one-bedroom and two-bedroom flats, admitted the region was no longer 'a cheap backwater'.

Any Spanish downturn could upset the fortunes of Aim newcomer Medsea Estates, a Spanish estate agency that focuses on Brits and the Irish.

The company is valued at £62m, valuing the stake held by chairman Tony Gatehouse at £45m. The shares floated earlier this month at 88 1/2p and are about the same level now.