French property now 10% cheaper, according to Offshoreonline.org
Slowly but surely, the tide has been turning in favour of sterling over the past few months, with the euro now significantly weaker against the pound than it has been for many months. In fact, the last time sterling was at its current level of approximately €1.20 to the pound was in the summer of 2010 and before that in December 2008.
Whilst the UK economy is not yet showing any significant signs of recovery, it seems the weakness which has affected sterling may finally have bottomed out, with currency markets now punishing the euro, which has weakened against both sterling and the US dollar.
For the UK buyer who has been searching for a new home in France, this is significant. The effect of the exchange rate changes over the past few months has been to effectively reduce property prices by around 10%, according to Offshoreonline.org, who specialise in sourcing euro mortgages for UK buyers. Add to this the aggressive pricing by developers in areas of the Cote D’Azur such as Nice and Cannes and the scene is set for UK buyers to at last be able to take advantage of what has been one of France’s stronger property sectors.
Exchange rate movements are important for buyers from the UK. Put simply, around six months ago, one pound sterling would have bought €1.10, but now for the same pound sterling, the UK buyer can expect to receive over €1.20. The net effect is to make any purchase of euros around 10% cheaper, saving £20,000 on a £200,000 house purchase, for example. Buyers looking at high end new launches, such as Parc Eugenie in Cannes should immediately see an enhancement to any rental returns, as with lower upfront purchase cost, the real yield they can expect will rise accordingly.
Commenting on the improved outlook for UK buyers in France, Offshoreonline.org managing director Tim Harvey said, “Exchange rates are a vital part of the mix for most UK buyers operating in France, but now it seems the tide may be moving slowly in favour of the UK buyer with the weakening euro opening up some very attractive options for UK buyers. With mortgage rates available from 3.45%, we have noticed a slow but steady increase in enquiries since before Christmas which has continued into the New Year.”