Thursday, December 10, 2009

Currency warning for festive season house buyers

By Elisabeth Dobson, head of private clients, World First

Property buyers looking to buy over the festive season may be in for a shock – exchange rates can be extremely volatile during December, January and February. Many people do not plan for or even realise the impact of currency fluctuations on foreign house purchases.

The knock on effect of the Christmas and New Year period historically sees rates vary by as much as 5% between the end of November and mid-February. This means a €300,000 purchase could cost up to £20,000 more if the exchange rate moves against you and varies dramatically from the rate first used to calculate the cost of buying abroad. An extreme example is that a property valued at €300,000 would have cost £244,160 in November 2008 but the same property would have cost £287,081 at the start of January 2009. This is an increase of a massive £42,921 and all just down to exchange rate moves!

Of course there’s also the possibility that rates could move favourably for UK purchasers. However the exchange rate risk at this time of year is huge. Undoubtedly a number of Brits will be due to complete on their property purchases over the Christmas period and it is important they know the implications currency fluctuations can have. One move in the wrong direction and a dream property can climb out of reach if the price moves outside your budget...


1 comment:

Moraira Property said...

Valid points raised here. We find so many clients focus so much on the property and trying to negotiate the best price but at the same time forget the money that can be saved by using a currency broker rather than their usual bank!