The top 3 European nations for purchasing a holiday residence.

• Real estate agents report that France, Italy, and Spain are the most popular destinations for individuals seeking to purchase a vacation home.
• Politically stable European countries offer good governance, easy mortgage access, and picturesque towns, countryside, and coastlines.
• Madrid, Tuscany in Italy, and Provence in France are popular cities for investment.

According to Kate Everett-Allen, a partner at real estate firm Knight Frank, three European countries are consistently popular choices for people to purchase a vacation home.

These countries' political stability, good governance, and easy access to the mortgage market have made them popular with overseas buyers, she stated.

Land registries provide buyers with an easy understanding of the real estate market by showing how much properties have sold for, as well as delivering on "soft" factors such as attractive countryside, good food, and appealing cities, according to Everett-Allen, who spoke to CNBC via video call.

What to look for

Before embarking on your search, it's crucial to determine your goals for the property. Do you plan to use it for family vacations and extended stays, or are you seeking rental income?

Renting a home is becoming increasingly important due to the higher mortgage costs. Everett-Allen stated that many people are looking for a hassle-free way to rent a property, especially since the introduction of "digital nomad" visas in some countries post-pandemic. These visas are attractive to travelers who want to stay for two or three months while they explore different countries.

"Some markets are inaccessible during winter months, so can you easily reach them from your home location? Additionally, when you're not staying at home, consider local contacts for maintenance or security assistance." - Everett-Allen.

According to Everett-Allen, people are now spending more time in their vacation homes than before. Prior to this, individuals wanted to be able to drive from the airport to their home within an hour. However, with the increase in vacation time from a weekend to a week, people are now willing to travel a little further to their vacation homes.

It's worth examining the rules governing rentals through platforms such as Airbnb, as seen in Florence's ban on new short-term lets in October and Paris's 120-day rental limit.

For Brits, spending more than 90 days out of 180 in Schengen-area countries (which includes France, Italy, and Spain) may require a visa due to Brexit.

France

According to the U.N.'s World Tourism Organization, France is the world's most-visited country, and Provence and the Alps, with their stunning landscapes and ample space, are popular places for northern European buyers to invest, Everett-Allen stated.

The Alps region has been popular post-pandemic due to its scenic views, natural surroundings, ample space for outdoor activities, and opportunities to spend quality time with loved ones.

In the second quarter of 2023, the resort of Courchevel 1850 had the highest prices for top-end property at 27,250 euros ($29,866) per square meter, while the resort of Morzine had the lowest, at 9,700 euros per square meter, according to Knight Frank's research.

France is making moves to make it easier for U.S. residents to do business in the country, with a plan that will provide French entrepreneurs in the U.S. with extended visa periods and simplify the visa procedure for American business owners, as announced by Olivier Becht, France's minister delegate for foreign trade, in November on X.

The French government is offering an incentive to encourage people to purchase new build second homes in the country. This incentive reimburses the standard tax rate (TVA) of 20% if the property is made available for rent for approximately 14 weeks per year. A two-bedroom, two-bathroom new-build apartment in Meribel-les-Allues, located near ski lifts, is currently listed on Knight Frank's website for approximately $605,000.

Italy

The Tuscany region, known for its vineyards, farmhouses, and towns such as Florence, Siena, and Lucca, remains popular, according to Everett-Allen. Additionally, the towns and villages around the lakes in the north of the country, which offer both mountain and city access, are also popular. A six-bed villa on Lake Como, where George Clooney reportedly resides, is currently for sale on Knight Frank's website for approximately $2.3 million.

Puglia, located in Italy's "boot," boasts a "stunning coastline, charming historic towns, and delicious cuisine," according to agent Sara Traverso of Nest Seekers International. A four-bedroom, two-bathroom rural Puglian home with a pool is currently listed by Nest Seekers for approximately $497,000.

Umbria, known for its medieval hilltop towns and relaxed lifestyle, is a popular destination in the central region of Italy, as stated by Traverso, who previously worked in her family's property firm there before moving to New York City.

"Sicily's cultural heritage preservation attracts tourists seeking a more authentic Italian experience," she stated. Additionally, the island is gaining popularity as a vacation home destination. According to Traverso, 2024 could be an excellent time to purchase, as he predicts a decrease in prices nationwide and an increase in supply, which benefits foreign buyers.

Since the introduction of a tax rate in 2017, Italy has attracted wealthy foreign buyers as their residence due to the flat fee of 100,000 euros a year on overseas income, regardless of the amount earned.

Knight Frank's clients in Europe and beyond have been attracted to the "flat tax" program that extends to family members and requires them to pay a fixed 25,000 euros on foreign income per year, Everett-Allen stated.

Spain

According to Knight Frank's data, the Balearic Islands and Marbella are popular among the French, British, and Germans when it comes to buying property in Spain.

The new digital nomad visa introduced in Spain this year is likely to attract more overseas buyers, as it allows individuals from outside the European Union to reside and work in the country for up to five years. According to Everett-Allen, owning a home and having a digital nomad stay there for two to three months at a time can be quite beneficial.

Madrid, the capital city of Spain, is gaining popularity among overseas buyers due to its lower cost compared to London and Paris, making it a "value play," according to Everett-Allen.

"The city is small enough to have a strong identity, good culture, and ease of accessibility, as there are numerous flights to Madrid now," she stated.

Madrid luxury properties cost around 8,000 to 9,000 euros per square meter, compared to Paris's 19,000 to 20,000 euros per square meter. However, real estate prices in Madrid are expected to increase by 5% in 2024, making it the fastest-growing city in European real estate. In contrast, Paris luxury real estate is predicted to rise by only 2%, while London prices are expected to remain flat, according to Knight Frank's forecast.