How Currency Moves Impact Property Prices For Expats

Shifts in currency values around the world 400are impacting how international buyers are purchasing property.

Although rises and falls in local prices are important to these buyers, their ability to purchase also depends on how their home currency fluctuates against the local currency.

International property firm Knight Frank has analysed the markets for expats in a new report and reveals just how currency moves influence purchasing power.

In London, expat property purchases are made in six currencies.

Homes in London are 16% more expensive for Turks as the lira has weakened against the pound, but buyers in other currencies have found prices much more affordable as their currencies have strengthened against Sterling.

British buyers see prices rise

Russians have benefited the most – seeing a 28% drop in prices as the result of currency moves. Other expats who have seen prices fall include Americans (111.6%); Australians (-11.7%); Indians (-14.1%); Chinese (-5.8%) and Europeans (-5.6%).

Meanwhile, British expats have seen a massive opposite balancing move.

Prices for Sterling purchases in Pakistan are up 13.1%; Geneva (7.8%); Hong Kong (12.8%); Dubai (13.1%); Sydney (13.8%) and New York (11.4%).

“The weak pound has attracted foreign investment into the UK and in 2016 this was further buoyed by better than expected GDP growth which has led to an improved long-run outlook,” says the report.

The one to watch, explains the report is the strengthening US dollar.

Watch the US dollar

“For buyers denominated in US dollars this will mean an appreciation in buying power. However, emerging market denominated buyers may find their buying power weakened due to depreciating currencies.

“As the Federal Reserve enacts further hikes we may see other central banks following suit, increasing the cost of borrowing both in US dollar terms and in local markets. This could impact the demand for debt-funded property purchases.

“Over the next two years 32% of ultra-high net worth individuals will look to invest in prime residential property outside of their country of residence. While movements in currency markets can be important to overall returns it is important to consider these alongside fundamental market indicators such as price performance and yield, lack lustre performance here can offset shifts in the US dollar.”

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