How does this affect the International Property market?
Domestic European markets delighted at the end of the 2015 as the exchange rate increased to 1.4, encouraging spending from UK buyers through the Eurozone… The telegraph ran a detailed article explaining how “your pound will go further”. There was, without doubt, a surge of interest in the property market. But 2016 immediately told a different story. With the exchange rate now dropping to less than 1.3 within a matter of weeks, concerned investors look to see whether this continued haemorrhage will soon cease.
The property markets in high-volume expat communities such as the Costa del Sol and the Cote d’Azur often take a hit during December whilst potential buyers are preoccupied with the Christmas festivities (and expenditures). But all was looking rosy for a busy year-beginning until these sliding figures hit home. This lack of condidence in the pound initially appears unprecedented. Some attribute it to fickle weather!! … “when the heavens open, nobody wishes to shop”. Or, the concerns over poor industrial and manufacturing data… or perhaps the government has made a serious error in judgement with a total lack of change to the interest rates.
Of course, the situation becomes even more complicated with a reverse pressure for potential international property investors, as European economies strengthen navigate to this site. Spain has officially stabilised following many years of crisis and places such as Portugal, are certainly on the rise. Throughout all euro locations 2015 saw a significant increase in property searches (48% in Spain). And this confidence will not be lost on the vendors who are now beginning to feel secure in the strategy to hold-out for a premium resale price.
So, how should a savvy international property investor behave? There is some suggestion to consider pound to euro currency exchange with a “forward contract”, allowing investors to secure an interest rate for the future. But, of course, this service does not come without fees.
Dawson and Associates will always preach straightforward caution, whatever the circumstances. We have been in the business since 1970 and have experienced every aspect of upturns, downturns and currency variation. If you would like to learn more about what constitutes a safe property purchase for the long or short-term in the UK, Spain or France, please feel free to give us a call. Initial advice is free of charge. +44 (0) 1424 882263