Britons show renewed brio for buying abroad
• Number of property-related money transfers up 56% year-on-year • And total value up 59% • Spain and France top countries but Canada and Australia see biggest rises
LONDON, 19 August 2014: Britons are showing a renewed appetite for finding a place in the sun, as figures from foreign exchange specialists Currencies Direct reveal dramatic increases in the number and value of overseas property purchases over the last year.
An analysis of property-related money transfers year-on-year finds that the number of transactions from Brits buying abroad has soared by 56%.
Meanwhile, the total value of money sent overseas to fund property purchases – including mortgage payments, outright purchases and other associated costs – has risen by 59%, suggesting that buyers are seeking out ever more expensive pieds a terre.
Spain and France remain the top overseas property hotspots, due to their proximity to the UK, and have seen healthy increases in the both the number of transactions (84% and 65%, respectively) and their total value (96% and 58%).
However, the most dramatic increases were with Canada, where purchases have more than doubled, rising by 143%, and Australia, where they have more than tripled, increasing by 231%. This has been prompted by the very weak Aussie and Canadian dollars as well as the strong cultural ties and tradition of migration with the two Commonwealth nations.
The increase in value of properties purchased is particularly noteworthy, given that it comes against a background of a strengthening pound, meaning that British homebuyers have effectively been getting more for their money.
Commenting on the findings, Phil McHugh, trading floor manager at Currencies Direct, said: "There are three key factors behind the increase in the value of overseas property purchases. First, the general improvement in the UK economy, which has made buyers more confident.
“Second, low interest rates, which have both encouraged investors to put their money into assets, as saving returns are so poor, and also provided cheap borrowing to fuel purchases.
“And third, the strengthening pound, which means buyers are seeing their money go further, boosting appetite for big-ticket investments like overseas property. As the UK looks set to increase interest rates before the US or Europe, sterling’s value will continue to rise, lowering the real cost of future property payments, and buyers will be factoring this in, too.”
The analysis also reveals striking trends within the New Zealand and Irish property markets. New Zealand purchases were up 40% year-on-year, yet their combined value rose by 127%, three times that amount. This is a sign that the relatively strong New Zealand dollar has not quelled interest in the country and has instead forced buyers to increase the amount they pay for Kiwi property in real terms.
Likewise, Ireland has seen number of transactions up by just 17% but total value up by 70%. This is almost certainly due property investors taking advantage of the struggling Irish property market, rather than holidaymakers looking for a second home, and so reflects outright home purchases as potential buy-to-lets.
McHugh comments: “Legal and logistical hurdles are only part of buying an overseas property. Buyers need to be aware of how currency fluctuations can have an impact on large, international purchases. Even a few hundredths of a percentage point can cost buyers thousands.
“The pound has gained against the dollar, euro, Aussie dollar, rand and emerging market currencies in the last 12 months, making property in many countries much more affordable.
“But the pound is set to strengthen further, as the UK looks likely to raise interest rates ahead of the US and Eurozone. Buyers would be wise to bear that in mind. They may want to phase their purchases, to make the most of an even stronger pound in future, or take out a forward contract, agreeing to buy currency only when the exchange rate reaches a preferred, higher level.”
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About Currencies Direct
Currencies Direct (www.currenciesdirect.com/e-tailers) is one of Europe's leading non-bank providers of currency exchange payment services. Since its formation in 1996, Currencies Direct has evolved from being an innovative service provider of foreign exchange for consumers and high net worth individuals into a dynamic and pioneering 'business to business' fully integrated treasury solution service provider. Headquartered in the City of London (United Kingdom) with operations in Europe, Africa and Asia, Currencies Direct is part of the Azibo Group, a privately owned investment company.
For more information or for interviews with Currencies Direct, please contact Michael Sheen on MSheen@bell-pottinger.com, 020 7861 3013, or Sophie Adamson on SAdamson@bell-pottinger.com, 020 7861 3922.