European Property Market Update - What You Need To Know


european property 2017

From the Brexit vote in June and the plummeting value of the pound, to the shock election of Donald Trump in November, the global events of 2016 will have knock-on effects on the UK and wider European property market. As we enter 2017, World First takes a look at the forces shaping the property market to help keep you in the know.

So, what is the story with sterling?

Taking a look back at June, the EU referendum had a tangible impact on the value of the pound, which has largely been enduring so far. On June 23rd the pound peaked at around 1.46 against USD but afterward underwent a steady decline. As of the time of writing, sterling is nearly 16% down on the same time last year. Likewise, the sterling/euro story is also one of diminishing value. The day prior to the Brexit vote, sterling peaked at around €1.30 and then the following day, it fell to around €1.17. Currently, it sits at €1.19, which is 14% lower than it was back in December 2015.

Deciphering the impact of a weak pound for property owners and seekers

Is purchasing your dream home in the sun on your to-do list for 2017? If so, a devalued sterling is likely not the news you were hoping for. Buying a home now, as compared with this time last year, could cost you 14% more within the Eurozone and 16% more anywhere in America.

But never fear, there is a largely positive property story on the flip-side of the equation. For those of you who’ve already made the leap and currently own a property in either Europe or America, you can swap those figures around. If you choose to sell at current rates, your American property could be worth 16% more and a Eurozone property 14% more once you’ve repatriated your cash.

Spotlight on the buy-to-let market

If instead of buying a property to inhabit, you’re interested in buying-to-let, Ireland is certainly one place worth considering. In World First’s latest buy-to-let league table, Ireland is ranked as the number one European destination for returns on offer for buy-to-let investors. Average rental yield in Ireland has now reached 6.54, up over a percent this year. The Netherlands, Portugal, Belgium and Hungary round out the top five best places. house europe property

From Brexit to Trump – exploring the impacts

World First’s own Chief Economist, Jeremy Cook, explores the impact of recent political events on the property market: ‘We have seen a slight correction in property values since Brexit. Taking into account income derived from these investments both retail and office property are down around one percent on the year with industrial properties yielding about two percent year-to-date. Brexit may have damaged prices but much like many things to do with the UK’s decision to leave the European Union there is a huge amount of investment uncertainty about what comes next.’
‘Similarly, Donald Trump is still a long way from showing his hand on trade, commerce, immigration and investment and a world of trade wars could easily see a desire for property increase as investors drive into perceived havens.’

Getting ahead – how to the navigate currency market movements when investing in property

Regardless of your type of involvement in property—whether you’re buying or selling, living in or renting out—don’t leave it all down to luck to determine exactly how much sterling you’ll take home at the end of the day. Dealing in the property markets is rarely an overnight affair, so there is certainly scope for the pound to rise or even to fall before you close a deal.

One tool you can take advantage of to help navigate the fast-changing currency markets is a forward contract. With a forward contract, you’re able to lock in a rate for up to three years at a level where you’re comfortable and then budget and plan in view of that set exchange rate. World First’s dedicated dealing team offer these at competitive exchange rates and can talk you through every step of the process

With a background in economics, fundamental and technical market analysis, Edward Hardy works with World First’s Economics and Currency Strategy team to assist and advise clients on transactional FX strategy and currency solutions. Over the course of the EU Referendum, Edward and team have advised clients large and small on the use of structured hedging products to help secure returns and accelerate performance.

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