Overseas Property to be Affected by Drop in Sterling

The Pound has dropped to its lowest point in more than six months against the Euro; now standing at just 1.069EUR according to xe.com.

The once revered currency has also been losing ground against the Australian, Canadian and American dollar, the Turkish Lira, and the Norwegian Crown.

The fall has been attributed to the announcement of Govt. Plans to sell off assets to raise money to put into our beleaguered coffers, which has reminded investors of just how bleak our economic outlook still is.

However this is only the catalyst, our 0.5% interest rate with no signs of a rise anytime soon is a massive turn-off to anyone considering storing reserves of cash in the UK.

**I will be interviewing a senior analyst at Moneycorp tomorrow for the lowdown on currencies present and near future. Register to receive a podcast of the interview by email.

All in all it is not a good time for British people to buy overseas property, especially in the Eurozone. What it means is that the 7% the exchange rate had taken off the price of Eurozone property between April and August, has now been lost again.

On the flip side it is an even better time for rich foreigners to come in and buy up prime UK properties, which have already endured some pretty severe price falls. The instant equity a currency shift like this has given UK property from a foreign buyers perspective can be offset against the risk that UK property could still fall further in value.

In the case of the Turkish lira, Sterling went from the low of 2.30 in April, to be worth 2.54 in August, which knocked 11% off the price of Turkish property for British buyers. It then hovered around 2.40 for some time. It is now right back down at 2.32.

It is surprising the difference that this will make to Turkey property sales. Luckily in the case of the Lira this is likely to be more temporary than with the Euro or US dollar. I would expect that it will be back up to 2.40 or somewhere close within the next fortnight. I will be calling Moneycorp for an interview with one of their senior traders tomorrow. Register using the form below to receive the podcast of the interview by email (view privacy policy).

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