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I have been looking to buy on the Costa del Sol for a couple of years now at Alcazaba Beach, Estepona.
Two years ago at the peak of the market I nearly bought a 2 bed apt. there for 425000EUR + IVA at an exchange rate of 1.42 which would have cost me about £315000
In the end I never did the deal and we all know what has happened since then with the market, economy and prices.
Two weeks ago an estate agent rang me and offered me a similar apartment on Alcazaba for 340000EUR.
I have never seen these apartments at this price. And at that price I’ll be mad not to snap it up, I thought.
Until I did the sums…at an exchange rate of 1.20 (todays price), I will pay £315000
Exactly the same price in GBP, so despite a drop of 20% in the EUR asking price nothing has really has changed.
Not all bargains are what they seem.
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The property is priced in € is not based on exchange rate. If a buyer was paying in €, than certainly there would be a reduction in price. Bargain or not ? that time will tell.
If, you raise the mortgage in € than you can mitigate exchange the exchange difference. Please do remember that if you were going to service the loan in sterling, than you have to take a view of the exchange rate over the life time of the mortgage as mortgage needs to be serviced on a monthly basis.
As, bank of England has hinted that interest rate could go down to 0%. I have not heard ECB or Mr Trichett, making any such remarks. In view of this I can only see the £ detoriating against € & $
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Black_Pear:
You are in a lucky position to have that kind of cash in sterling. There are three alternatives.a) Still raise a mortgage in € and keep the £, as and when the exchange rate changes and you are comfortable with it sell £ to buy €.
b)Do not buy now. Properties are like partners, you can always find another one as good or better. The partners change but I preference mostly remain constant.
c) Buy in UK, with the cash that you have. negotiate a massive discount on new builds I believe they are offering above 30 % in some cases. sit on it for couple years or so. Sell it at a profit, by that time Spanish properties will be much cheaper than today and the exchange rate would have improved.
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I’m wondering if all this pound/euro thing is part of a plan – by next year if it ends up being a one-for-one, then Gordy can announce “Well, we might as well swop to euro now, it won’t make any difference as they’re worth the same”.
With the current “politically-battered” Brit. public, would they have any energy/the will left to protest?
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@shakeel wrote:
As, bank of England has hinted that interest rate could go down to 0%. I have not heard ECB or Mr Trichett, making any such remarks. In view of this I can only see the £ detoriating against € & $
You have not heard it yet.
EU is going to be as bad if not much worse than UK.
The 2006-2007 was the time for the run on the dollar. 2008 is the year of the run on the Pound. 2009 might be the year of the run on the Euro.
Germany is already in recession, I do not expect Italy, Spain or Greece to save the Euro zone.
http://biz.yahoo.com/ap/081113/eu_germany_economy.html?.v=8
Of course UK might go all the way to the drain, with unemployment of more than 3 million (today 10K were annoiunced to be cut by BT) and Pound might become worthless.
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@katy wrote:
I saw the press conference given by the Governer of the Bank of England where he gave a depressing view. Everytime he speaks the pound drops. I think he should be sacked.
What would you expect him to say? The situation is very bad and getting worse by the day.
The Governer of the Bank of England is not supposed to confort the people, Blair and Gordon have lied enough to people and somebody should start telling the truth.
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