Could Euro crisis spark new sales rush?
By Stephen Harris of Overseas Property Professional.
Fears over Europe’s economy are set to make property cheaper for foreign buyers if the euro keeps sliding, with some firms hoping for a surge in sales.
A Euro 750 billion deal announced this week to halt the debt crisis affecting the eurozone has been greeted with scepticism by currency traders and fund managers. And stockmarkets in Asia and Europe have fallen as initial enthusiasm for the bailout wears off.
The UK’s slow progress in forming a government after its election last week has also shaken the pound but brokers believe sterling is still likely to rise against the euro later this year.
“The euro is overvalued at current levels and we will tend to see it move back to its long-term average against the pound and the dollar,” said Jeremy Cook, chief economist at World First currency broker.
“The Eurozone has a very inflexible system and another shock from somewhere like Spain or Greece is still a possibility. We could see the pound reaching €1.21 or €1.22 in the next three months.”
Magic number
Agents and brokers have claimed many UK buyers are waiting for the pound to rise above €1.20 before they spend their money abroad.
“We’ve already seen interest in buying property start to increase,” said Cook. “Some people have been putting off buying for a year – they have the finance and are all ready to go but want to get the best rate they can.”
But others in the market are sceptical this will make a real difference. “The same people are still looking for excuses – they’re waiting for something but they’re not sure what,” said Martin Sadler of UK-based agent Assetz.
Mark Bodega of currency broker HiFX said the investment aspect is secondary for most of the firm’s property clients. “There will always be those clients who will be holding off for a better rate but exchange rates are not driving buying decisions,” he said.
Fund Investment
Institutions and funds are also looking to take advantage of a weak euro, according to Oliver Georg, managing director of Behringer Harvard Europe.
“We’ve seen increased interest from North America as any US-denominated fund investing in property in Europe can get a substantial discount at the moment,” he said.
