Strong us dollar slows international property sales

Photo: Images_of_Money

The strength of the US dollar in the past year has slowed sales to international buyers.

Currency exchange rates are an often overlooked force in property markets, but the weakening of one against another can save thousands for a buyer, or cost hundreds to a seller. A favourable exchange rate between the pound and the euro has seen demand from overseas buyers soar in Portugal's and Spain's property markets.

In the US, the strengthening dollar has boosted spending power for US buyers too. For international buyers hoping to invest in America, though, the dollar's strength has reduced the affordability of the country's real estate. Indeed, according to the National Association of Realtors, sales transactions in 2014 to buyers outside of the US dropped 10 per cent.

NAR Chief Economist Lawrence Yun says this is "possibly due to the strengthening of the US dollar in relation to international currencies and weakening foreign economies."

However, the amount of money spent has increased; total sales dollar volume increased 13 per cent, with sales estimated at $104 billion, up from $92.2 billion in the same period one year earlier.

"This means international purchasers in the US have become an upscale group of buyers, spending more money on fewer homes," adds Yun.

In 2014, five countries accounted for 51 per cent of all purchases by international buyers: China, Canada, Mexico, India and the United Kingdom. For the first time, buyers from China exceeded all other countries in terms of units purchased and dollar volume, purchasing an estimated $28.6 billion worth of property. Buyers from Canada followed with $11.2 billion in purchases, followed by India with $7.9 billion, Mexico with $4.9 billion and the U.K. with $3.8 billion.