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Currency winners and losers - 20 February 2009

Recent headlines in the overseas property market have been all about how much more expensive it is for British buyers to purchase property overseas in the current economic climate as the value of Sterling has dropped significantly against its immediate currency peers. The worsening of the exchange rate of the Pound against both the Euro and the US Dollar has made buying in most of the major overseas property destinations even more expensive.

Combined with the increased difficulty buyers are finding in funding their overseas property dreams, either through mortgage finance or through the sale of property in the UK, currency exchange rates are a major factor in the slowing-down of the overseas property market in the past six months.

However, as the latest figures from currency broker FC Exchange show, some markets have become cheaper for UK buyers in the past year through exchange rate fluctuations. In fact, since February 2008, Sterling has been on something of a roller coaster ride with a number of different currencies, finishing the year in substantially different positions to those it started.

Most seriously changed were the positions against the US Dollar and Euro – with 27 per cent and 15 per cent decreases in value respectively. This means that someone buying in Sterling in the Euro zone now will need 15 per cent more sterling to give them the equivalent amount of euros than they did in February 2008.

However, Sterling has performed well against other currencies, notably the Australian and New Zealand Dollars. In fact, buying a property in New Zealand for the national average house price is now potentially £16,000 less than it was in February 2008. This could well change the shape of the overseas property market in the coming year, according to Daniel Wray, senior Currency Broker at FC Exchange.

“Émigrés, priced out of the French and Spanish markets, might start contemplating a bigger step to antipodean countries where they’ll get more for their money and enjoy a better quality of life on their UK pension.” He said.

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