Investors and expats paid in US dollars or UK pounds are set to benefit from the strong performance of these currencies when it comes to overseas property investments in 2015, experts say.
The steady recovery of the US economy over the past year combined with the decline in the Eurozone has led the US dollar to make substantial gains.
A year ago, in the making of a residential property investment in Europe, one US dollar would have bought 74 cents of a euro, while today one US dollar buys 84 cents, according to estimates by foreign currency experts Worldwide Currencies. This hike in the value of the US dollar amounts to an 11% reduction in residential prices in key investment destinations using the euro such as France, Italy, and Spain.
The strong performance of the US currency is having a similar effect for expats living in places such as the Gulf, China, and Hong Kong, essentially cutting property prices, experts note.
Not unlike the dollar, the strong performance of the pound sterling based on the recovery of the UK economy means that UK expats are also in a position to benefit from the currency developments. While a year ago one pound sterling equalled around 1.20 euros, today it can buy 1.28 years. This is a notably strong performance especially given the fact that in March 2013 the sterling was down to 1.15 euros.
A further piece of good news for expats in France comes from the recent decline in interest rates for euro mortgages in the country, reported expat mortgage portal Offshore Online. 10-year fixed rates in France are now starting at 2.70% compared with a variable from 4.24% in the UK, providing a higher level of repayment security.
According to Guy Stephenson, a spokesman for Offshore Online, many expats could take advantage of the favourable currency developments in order to make investments in properties in Europe or the UK.
In his words, mortgage availability in the UK is good, providing a buyer has a deposit of at least 25%, while France provides a great range of choices, with many lenders asking for a deposit of just 15%.
“In Spain too, the situation is easing, with long term rates from 3.50% above three month Euribor for tracker type products, whilst the position for Portuguese and Italian buyers is also looking up as lenders there re-enter the market,” Stephenson added.