UK Property Investors prosper without foreign currency mortgages

Britons who bought property overseas without the aid of a foreign currency mortgage four years ago will have generally made significant financial gains, in spite of the recent instability in property prices around the world, according to fresh research.

Taking the Italy property market as an example, a study conducted by FX department at Close Brothers Limited Close Treasury shows that any Brit who bought an Italian property in euros in June 2005 would have seen the sterling value of this increase by around 65%, this year. This has been aided by a 30% increase in property prices over that period. This appreciation was supported by a 27% leap in the value of the euro compared to sterling over the same period.

The strength of the euro mean that in the last year alone, a UK investor in the Italian property market could have made a return of in excess of 10%, in spite of a the fact that the average price of a home in Italy has increased by just 3% during that period.

Likewise, Brits who invested in property in Spain in June 2005 would have seen the sterling value of residential investments increase by 59% this year, due to a mix of capital growth and an increase in the value of the euro against the UK pound.

Elsewhere, taking growth and currency exchange into consideration, Treasury, said that the Sterling value of homes bought in Portugal, France, and Switzerland for example in June 2005, appreciated 24%, 47% and 54% respectively this year.

Mark Taylor, head of foreign exchange at Close Treasury, said: “When British investors calculate the value of an overseas property they bought a few years ago, they not only need to look at how real estate prices have changed, but also what has happened to the exchange rate between Sterling and the local currency.

“Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms.”