The Pound has just hit a 16 month high against the Euro, encouraging UK property investors to develop more interest in the strengthening Spanish property market.
GBP/EUR currently stands at around 1.2000, a growth of more than 10% over recent months. The result is that a property in Spain which may have been on the market for GBP 200.000,00 just 8 months ago is now effectively GBP 20.000,00 cheaper!
There are a number of reasons for the weakening Euro, not least the general concern about the debt which is currently being carried by countries which use the Euro as their primary currency. There is some worry that countries such as Greece, Ireland, and Italy will be able to repay their debt which is spurring investors to move their assets out of the Eurozone and, which, in turn is causing a devaluation in the Euro.
Governments from within the Eurozone are trying to find solutions to the debt crisis. If they are successful, it is likely that the Euro will strengthen again against Sterling, especially given the fact that it looks like the UK may be heading for another period of slow economic activity.
Whilst Spain remains the most popular destination in terms of volume of currency transactions in 2011, interestingly, the UK takes second place with 18% of transactions according to the latest data compiled by FX specialist, Currency Index.
Almost a quarter of all FX transactions in 2011 (24.99%) were sent to Spain, unsurprising given the country’s appeal as a top holiday and second home destination. However, while France took the third spot with 14.83% of all transactions followed by the US in fourth place at 9.01%, one of the most surprising results was the volume of transactions sent to the UK last year.
Robin Haynes, MD of award-winning Currency Index explains,
“18.10% of FX transactions, nearly a fifth, last year were made back to the UK. This is most likely a result of people returning home from overseas or in a few cases sending currency to UK-based Euro/USD accounts for example, which can be overseas properties where a lawyer’s client account is in the UK for example. In addition, part of these transactions will be business clients repatriating income and also individuals earning money abroad. It really is amixed bag but of note none the less.
“In Q4 2011, there was a 15% increase in people bringing money back to the UK probably due to the Euro crisis which sparked panic and saw people moving money back to locations seen as safe havens.”
Indeed, the Eurozone sovereign debt crisis has caused fear to spread but for those considering buying property abroad, the reduction of the value of the single currency means that now is in fact one of the cheapest times to buy a place in the sun.
