Currency
You can’t keep a good pound down
The recession has continued to keep the value of the Pound down – and the cost of investing overseas
has therefore stayed high. Or has it? According to research by specialist brokers Currency Index Ltd,
there are still hotspots where your Pound will still buy more than it did 18 months ago.
The global downturn has had still reduced dramatically. In some markets, such as Italy
several key effects for investors
The combination of these effects
and France, lifestyle buyers still
– some of which can combine to
can be seen in the following
dominate the market, and prices
offer new opportunities. Firstly,
tables. Agents in Spain and
have held up better, so for a UK
exchange rates have fallen almost
Bulgaria, where Euro prices have
buyer, the fall in exchange rates
everywhere, in emerging markets
dropped most, have seen the
has outpaced the fall in prices,
as well as the more established
effective sterling cash price of a
so properties are now more
Eurozone. This has made the
2-bed golf apartment or a 1-bed
expensive for cash buyers.
cost of buying, say $100,000 or
apartment respectively, fall by Currency Index compared
null100,000, around 25% more
nearly 30% in Spain and nearly property prices and exchange
than at the peak of sterling’s
20% in Bulgaria. rates in May 2008 and September
power some 2 years ago.
The effect is even more
2009. For more information on
Secondly, property prices around
pronounced if you are borrowing.
obtaining the best commercial
the world have also fallen. In
The monthly mortgage payments
exchange rates, contact Currency
some areas where the buyers have
on a 5-bed Florida villa would
Index on 0800 043 2623 or
disappeared, like the Spanish
cost over 40% less than in January
www.currencyindex.co.uk
Costas, or where supply is now
2008, due to the fall in price of
exceeding demand, like Florida,
the property and the reduction
prices have actually fallen more
in typical mortgage costs from
in percentage terms than the
7.5% to 5%.
corresponding fall in the value
of the Pound.
“The Pound is unlikely to recover
to its previous levels of null1.40
Thirdly, global interest rates
and $2 to the Pound”, says
are now generally significantly
Tom Arnold, Sales Director at
lower than at any time in recent
Currency Index. “So we are seeing
history, as central banks around
investors and holiday home buyers
the world have slashed the cost
changing up their sterling to buy
of borrowing in order to provide
overseas at lower levels, based on
liquidity to financial markets.
the assumption that if they ever
Although mortgage rates have
sell up, the property price is likely
not fallen as much as the central
to recover more than the Pound,
banks would have hoped, the cost
to give them a capital return in the
of financing an overseas deal has
long run.”
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