A Fragile Pound Sterling Might Improve UK Property Market
With the United Kingdom Housing market still in depression, owners are looking out for indications of cheer and there is a conceivably unexpected positive effect on Values beginning to make itself felt.
The GB Pound is currently Frail compared to many other currencies. Consider for example the Euro. Just a short time ago 100,000 euros would have translated into £70,000, barely enough to buy you a modest terraced property in a reasonable area of the United Kingdom. But currently that same 100,000 euros would buy £86,000. And, because the prices of Homes in the UK has slumped by around 20% in the same time; that £86,000 will now buy you far more than it would have 2 years ago. In short your 100,000 Euros has climbed from an equivalent property purchasing power of £70,000 two years ago, to an equivalent £107,000 today, a 50% increase in buying power. However, these buyers are well aware that they need to strike before the pound strengthens. That is excellent news if you are trying to Sell Property Fast, because it balances your bargaining position quite a bit. For sure, if I was looking to Sell my Home fast, I’d be sure to make sure it was well publicised abroad as well as at home.
This double effect is luring overseas investors. These may well be individuals selling property abroad (assuming their local market is reasonable) and then repatriating back to the United Kingdom . They see the present climate as a great opportunity to return to the United Kingdom and actually gaining in capital base by doing so. Others are raising funds locally (abroad) and then bringing funds to the United Kingdom at these attractive exchange rates and entering the buy to let investment market. Such investors can find that they are bringing in the same rental income they would have had two years ago for only two thirds the outlay. And provided they don’t convert the rental proceeds back to their native currency they do not suffer the penalty of selling a weak pound. They can retain income within the United Kingdom to fund further good value property purchasing.
Another type of overseas buyer is the corporate investor or fund manager. There are signs that a good many very big funds are trying to come into the United Kingdom residential property market to snatch extremely good value Housing using excellent value currency GB pound. Once again this plays on the double benefit effect described earlier. Funds are being used to build United Kingdom based rental portfolios or in some cases to simply trade in housing in the United Kingdom . It is believed that many such funds emanate from the far east, in particular China. Again, if you can access these purchasers you’re likely to make a Quick Home Sale at a sensible price.
All of this is a tiny, but positive, driver to the property market. By the ubiquitous effect of the rules of supply and demand; this can only have a positive effect on Values . Most importantly it stimulates turnover and can unlock Property chains, so one investment purchase can lead to a number of onward sales and a further increase in turnover.
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