The best European countries to buy a vacation home: Spain, Italy, France

There are three European countries that are “perennial favorites” for people to buy a vacation home, according to Kate Everett-Allen, a partner at real estate firm Knight Frank.

France, Italy and Spain all have political stability, good governance and easy access to the mortgage market, factors that have helped these countries become popular with overseas buyers, she said.

It’s also easy for buyers to understand the real estate market via land registries that show how much properties have sold for, plus they deliver on “soft” factors such as attractive countryside, good food and appealing cities, Everett-Allen told CNBC via video call.

Rules around rentals using sites like Airbnb are worth checking. The Italian city of Florence, for example, banned new short-term lets via such platforms in October, while in Paris there is a 120-day limit on renting out properties.

For Brits specifically, Brexit means they can only spend 90 days out of 180 in Schengen-area countries (which includes France, Italy and Spain), otherwise a visa is likely to be required.

France is the world’s most-visited country, per the U.N.’s World Tourism Organization, and Provence and the Alps with their striking landscapes and plenty of space are both popular places to invest for northern European buyers, Everett-Allen said.

Post-pandemic, the Alps region has been popular for its outdoors lifestyle. “It just [ticks] all the boxes in terms of views, nature, space, opportunity to keep fit … time with family and friends,” she said.

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

There are moves to make France an easier place for U.S. residents to do business, with a plan that will see French entrepreneurs in the U.S. having access to extended visa periods and American business owners benefiting from a simplified visa procedure, according to Olivier Becht, France’s minister delegate for foreign trade, who posted on X about the deal in November.

France is also encouraging people to buy new build second homes in the country via an incentive that reimburses the standard tax rate (known as TVA) of 20% if they make the property available for rent for around 14 weeks a year. A two-bedroom, two-bathroom new-build apartment in the town of Meribel-les-Allues close to ski lifts is listed on Knight Frank’s website for around $605,000.

Tuscany, with its vineyards, farmhouses and towns and cities such as Florence, Siena and Lucca, is ever-popular, according to Everett-Allen, as are the towns and villages around the lakes found in the north of the country, with both mountains and city access within easy reach. A six-bed villa on Lake Como — where George Clooney reportedly has a home — is for sale on Knight Frank’s website for around $2.3 million.

To get more for your money, Puglia, in the heel of Italy’s “boot,” has a “stunning coastline, charming historic towns [and] delicious cuisine,” according to agent Sara Traverso, co-founder of real estate firm Nest Seekers International, in an email to CNBC. A four-bedroom, two-bathroom rural Puglian home with a pool is listed by Nest Seekers for about $497,000.

Traverso, who worked in her family’s Italian property firm for several years before moving to New York City, said the central region of Umbria is also popular for its medieval hilltop towns and relaxed lifestyle.

“The preservation of its cultural heritage attracts people looking for a quieter, more authentic Italian experience,” she said. The island of Sicily is also becoming more popular for vacation homes. And 2024 could be a good time to buy, with Traverso expecting a decrease in prices across the country and an increase in supply, which favors foreign buyers.

Italy has become popular for wealthy overseas buyers taking up residence in the country because of a tax rate that was introduced in 2017, allowing people to pay a flat fee of 100,000 euros a year on income made overseas, regardless of how much that income is.

This “flat tax” program extends to family members, who pay a fixed 25,000 euros on foreign income per year and has “strongly” appealed to Knight Frank’s clients in Europe and beyond, Everett-Allen said.  

Spain is popular as a place to buy among the French, British and Germans, with the Balearic Islands and the glamorous southern seaside town of Marbella among their preferred areas, according to Knight Frank’s data.

And it’s likely to become even more popular for overseas buyers due to a new digital nomad visa introduced this year, which allows people from outside the European Union to live and work in Spain for up to five years. “If you own a home and you’ve got a digital nomad in there for two or three months at a time, that’s quite useful,” Everett-Allen said.

Capital city Madrid, which has been “under-the-radar” for overseas buyers, is becoming popular because it is a “value play” versus London or Paris, Everett-Allen said.

“It’s a small enough city, that it has a sort of really strong identity, good culture, ease of accessibility, [as] there are so many flights now to Madrid,” she said.

Luxury property in Madrid costs around 8,000 or 9,000 euros per square meter, compared with Paris, at about 19,000 or 20,000 euros per square meter, Everett-Allen said. But real estate prices in Madrid are set to rise about 5% in 2024, per Knight Frank’s forecast, making it the fastest-growing city in European real estate — Paris luxury real estate is set to rise 2%, while the agency said that London prices will remain flat.