Article written by Edward Hardy, Industry Manager at World First Foreign Exchange
Well, that went quickly didn’t it? The first three months of 2015 are already behind us, and for those buying property in Europe or making any currency transfer from pounds into euros, they were three pretty good ones. The first quarter of 2015 has been a decent one for the pound, with sterling keeping its head above water through the majority of it and making some strong gains along the way – particularly against the euro.
This has been good news for British expats transferring money to Europe. For example, at the start of the year, the GBPEUR rate (that’s pounds into euros) was 1.2824 – that means £250,000 would have got you €320,600. In the middle of March, that rate had gone up to 1.4136, with the same amount of money worth €353,400 – €33,400 more in the space of two and a half months.
Since then, the pound has slipped a little, with GBPEUR at around 1.365 at the end of March. But this is still well up on where it was at the turn of the year, and on a £250,000 transfer, you’d get more than €20,000 extra compared to January 1st.
Those looking to purchase property overseas and anyone transferring their pounds into euros will be buoyed by the strength of sterling compared to the euro. Then again, the past quarter won’t be remembered by most for how well sterling performed, but rather what has caused the euro to perform so badly.
Well, here’s your answer – Q1 of 2015 saw the European Central Bank announce and launch a quantitative easing program, and there was all the uncertainly around the Greek Elections and the threat of Greece leaving the euro. These factors are likely to continue keeping the euro on the low side as we move forward into the second quarter of the year, though these things can’t, of course, be predicted.
It’s not just the euro that’s had its fair share of uncertainty. The Danish Central Bank cut interest rates into negative territory to weaken the Danish kroner and we saw the Swiss National Bank dropping its floor in EURCHF and allowing the franc to trade freely for the first time since 2011 – i.e. the strength of the Swiss franc is no longer being tied to the euro.
Against such a tumultuous backdrop, some may be grateful for the relative tranquillity of sterling and the fact that it is performing well against many of the world’s major currencies.
On the rise
So, the pound’s strength against the euro means your money will go further, but what about the price of property on the Continent. Well, there’s no doubt that house prices are on the rise as the European property market is enjoying something of a renaissance. Ireland has the world’s fastest growing property market with prices up over 16% in 2014. Estonia’s prices are well up, with its capital, Tallinn, seeing prices rise by over 12%. House prices were also up in Holland (4.1%), Latvia (3.7%), Czech Republic (2%), Switzerland (1.8%) and Croatia (1.7%).
However, some of the destinations that are popular with British expats saw prices fall in 2014, including Spain (-2%), Greece (-4.3%) and Portugal (-0.5%). In these places, there is still the opportunity for a bargain, though it would appear that time may be running out to pick one up, given an increasingly healthy property market.
One thing’s for sure, the strength of the pound is in your favour – for now – and your money goes a lot further if you’re buying in Europe this spring.
For more information on how to get cheaper, faster currency transfers click here