Remember those times when you were a kid sat in the back of the car wondering impatiently when you would reach the seaside? Well it’s a bit like that with property market analysts today, we’re all wondering when we’ll get there (the bottom that is…)

Why? Because the bottom of a property market slump is the prelude to a scramble to invest in below market value properties before their values begin to rise again. The difficulty is calling the bottom of a market can be hard at the best of times. In the current economic climate there are far more variables to consider, particularly for the overseas property investor.

Just because a property market has seen values fall by 60% or more it doesn’t necessarily mean that a market has reached its bottom. Take Ireland for example, the market for apartments in Ireland has fallen 60% since the peak of the market back in 2007, but if we cast our minds back to the beginning of last year The Irish Times was telling us that the market had finally reached bottom quoting a report by ratings agency Standard & Poor’s. Unfortunately the assessment proved to be way of the mark as Ireland’s housing market has fallen by 15% so far in 2011, even after a few pints of Guinness it’s hard to feel optimistic about the future of Ireland property in 2012.

So when is a good time to ignore the pessimism and take advantage of low prices in your chosen market?

What we must look for are those positive early signals others fail to notice, like a slowing in the rate of price declines or even signs of growth. As we see in Ireland just because a market falls dramatically, it doesn’t mean that the bottom will be reached any time soon, the same rule applies to those markets that may have seen more modest falls in property prices. Take Poland for example, Polish cities including the capital were once magnets for overseas investors, but despite the feel good factor of co-hosting the European Football Championship, the property market in Poland continues to slide at a faster rate in 2011 than it did in 2010, falling 3.83% in the second quarter of 2011 with the annual rate of decline being 6%.

So if we look at world property markets in this way we begin to see a clearer picture emerge, which isn’t driven purely by media speculation. Spain is one market that has received a bad press due to the spectacular falls seen in its property market and the same applies to neighbouring Portugal. The sovereign debt crisis hasn’t helped and has left investors spooked by the consequences of those countries defaulting.

Yet despite this, there are signs that in some areas of Spain, property prices may well have reached rock bottom and we are already beginning to see positive changes in the quarterly figures. Murcia, Malaga and Tenerife property prices have risen on the most recent quarterly data suggesting that confidence is beginning to return after nearly four years of falling prices averaging 7% per annum.

The Algarve in Portugal is also showing some promising signals with a rise in the demand for rental properties and a huge increase in the number of overseas investors looking to invest in property. Mortgage rates are favourable and there are tangible signs that the banks may be loosening their purse strings. Portugal too hasn’t experienced the dramatic property price falls of its neighbour Spain because oversupply hasn’t really been an issue.

Add rising demand for rental property from the cash strapped domestic market and Portugal Property could well see an improving outlook in 2012.

European property markets nearing the bottom in 2011