The Euro and Other Foreigners
Once again, a warning about
buying properties in foreign denominated currencies.
Those who bought properties in Cyprus, against my advice, may well have
bought using mortgages denominated in Swiss francs. Since the sudden
rise in the value of that currency, all those mortgages have become
much more expensive at the same time as the value of the properties has
Those who bought in Brazil are now sitting on properties that have also
fallen in value while the Brazilian real has dropped through the floor.
Not only that but the country's central bank interest rate has climbed
back up to 12.75% thus making loans more expensive, and choking off any
rise in house prices.
Those of you who, also against my advice, bought property in Turkey,
not only have a full scale war raging across the border, but stalled
property prices, and a catastrophic crash in the Turkish lira. In
theory, house prices have halved in value over the past year. That's
A friend of mine thought the bottom had arrived in the Spanish market,
and bought a nice place on the Costa del Sol. He is one of many folks
who thought they'd timed it just right. Unfortunately, the euro has
tanked rather spectacularly. Against the US $ the currency is down from
$1.40 to below $1.10, and shows no sign of stopping. There has been a
similar drop against sterling, thus effectively taking a serious amount
off the value of any property bought a year ago.
The latest magazine I read in a cafe in Portugal last week talked about
the rise of buy-to-let in the Algarve. I guess estate agents must be
getting desperate. You NEVER buy rental properties in tourist areas
unless there is a 90%+ occupancy rate year round. In Portugal the
occupancy rate for rental properties is less than 10% out of season (9
months of the year), and varies from about 90% down to less than 10%
for the holiday season. That's because of the vast over supply of
properties, and the capricious nature of holiday plans. If you want to
get into buy-to-let always buy where there is a constant supply of
clients, and a solid employment situation.
You should always look to buy in a currency that you use for spending.
If you live in the eurozone, then buy an apartment in Paris. If you
spend your money in sterling, buy somewhere in the UK where employment
The euro may have hit bottom. On the other hand, it may not. I dont
think it's worth guessing. But… if you get a buzz from gambling…
I have been suggesting buying pubs in the UK for conversion to flats.
Anyone taken up the idea? Actually, I hope not. I dont want competition.