Once a discretionary purchase primarily for own use, the global market for second homes today is driven by income returns. Just under half of all people purchasing a second home in 2019 did so with the intention to rent it out on a short-term basis from the outset. This has overtaken ‘own use’ as the primary reason for purchase.

Intended use of property at purchase

Half of owners surveyed now intend to let their properties from the outset. This trend has gone hand in hand with an expansion of the lower price tiers of the market. House prices rose steadily across most global markets in the run-up to the Global Financial Crisis (GFC), reflected in an increase in purchases of higher-value properties over the period.

In 2007 a quarter of all properties purchased (based on our survey sample) cost in excess of $500,000.

But by 2019, purchases in that price bracket had dropped to 22%. The lower price tiers (most notably the $100,000 to $299,999 segment) have expanded, accounting for 44% of all purchases in 2019 as buyers turned to smaller, easier to manage and higher-yielding properties.

Not all destination countries have experienced this trend. Purchasers in Portugal have moved into higher price tiers as that market has seen prices rise by 32% in the last three years. The dominant price point here is $100,000 to $299,999, but property over $500,000 made up 17% of all purchases in the last three years, up from 7% the three years prior.

At the other end of the spectrum, in Brazil purchases under the value of $100,000 now dominate, accounting for 65% of all purchases in our sample in the last three years, compared to 29% between 2014-16.

The short-let market in context

Tourists remain the most important source of demand for short lets, a sector that continues to grow rapidly. Globally, international tourist arrivals increased by 4% in the first half of 2019, compared to the same period in 2018, led by the Middle East (+8%), Asia Pacific (+6%) and Europe (+4%).

Chinese outbound tourism continues to drive growth in arrivals (+14% in trips abroad), in spite of trade tensions and a slight depreciation in the yuan. Outbound travel from the US remained solid (+7%), benefitting the Caribbean in particular, which saw an increase in arrivals of 11% compared to the same period in 2018.

Cultural and technological change is having an impact too. The rise of the sharing economy and advances in mobile technology have fuelled demand for home rentals and made the whole process simpler than ever before. Services such as HomeAway have enabled this transformation, providing a deeper pool of renters to owners.

About the survey

In June 2019, Savills World Research surveyed 7,800 property owners who list their properties on HomeAway in 10 major markets (US, Canada, UK, France, Spain, Italy, Netherlands, Portugal, New Zealand, and Brazil).

A second survey was carried out of 6,800 renters who use HomeAway, from the same 10 countries. Where applicable, we have benchmarked these findings against the last Savills/HomeAway surveys, conducted most recently in 2018 and 2011.

_{Read the articles within Report: Second Homes below.}