Weak euro and lira good news for overseas buyers
The weak euro and lira are both good news for property buyers, as property becomes more affordable overseas.
The euro saw its biggest fall against the dollar in two months, on the back of the European Central Bank announcing it would increase quantitative easing in the coming months to compensate for an expected lull halfway through the year.
Lee McDarby, executive director of U.K. corporate foreign-exchange sales at Nomura Holdings Inc. told Bloomberg that ECB Executive Board member Benoit Coeure's comments "provided an acute reminder of how fragile and volatile the markets have been in 2015".
The euro fell by more than 1 per cent "almost instantly", he added.
The single currency fell by all 16 of the world's major denominations, though, continuing an overall trend that has seen the UK's strong sterling boost spending power for Brits in Europe. Indeed, demand for Spanish and Portuguese property has both soared in recent months on TheMoveChannel.com, as investors and holiday home hunters take advantage of favourable conditions.
Agents in Turkey, though, say that a similar pattern is occurring in Turkey too.
Sterling has gained around 14 per cent against the Turkish lira since the start of 2015, with the current exchange rate approximately £1/4.12TL. Compared to May 2014, today’s rate is around 18 per cent better, while compared to five years ago it has swung 85 per cent in favour of British people.
"Lots has been made of the weaker euro benefiting Brits buying and living in Eurozone countries, but let’s not forget Turkey," says Julian Walker, director at Spot Blue International Property.
"As it is, we typically sell Turkish property in euros to British people. After that, British people gain again when they buy lira for day to day living costs. Even taking into account Turkey’s inflation rate, which is forecast to remain on a gradual downward trend, the exchange rate is making a difference for British owners and expats. Over the last 12 months, let alone the last five years, Sterling’s gain against the Turkish lira has been greater than it has against the euro."
The high interest rates offered to savers in Turkish banks is also benefiting British expats. As of May 2015, local banks are typically paying 8-9 per cent interest on deposits in specified Turkish lira savings accounts, with interest paid monthly.
"It’s not uncommon for British people to fund or part-fund their monthly living costs in Turkey using interest earned on savings in their local bank," adds Walker.