KieronF

We were slap bang in the middle of the process of buying our Spanish dream property when this recent slide began. Since May until now (when our deposit was due) the GBP cost rose £38k so we have had to back out. Looks like the dream will have to wait.

Countryboy1

I don't know the facts I confess, but I suspect this has pretty well almost killed of the buying of property by Brits.

bobd22

Given that the thread is for expats in Spain not really, if the forum was Spaniards or Germans living in UK then I would agree. What you say is something like Blair would spin to us😃

bobd22

Of course it's all relative as there is no actual real value to currency's anymore i.e. no specific gold standard. However if the dollar wasn't weaker at the moment to £ which it is then relative to where £ is to euro we would be looking at dollar/£ 1.20 or less. That would push up fuel costs which would push up inflation and make £ even more negative. Hence why I said USA concerns are helping £ euro. But yes the whole thing is relative because reality is the world runs on little more than monopoly money these days.

bobd22

Thats a real shame for you Kieron. However sadly this whole Brexit fiasco is affecting many of the likes of us negatively in various ways. At least you were in a position to pull out of the purchase but it will have still cost you money. However according to the vision of Brexiteers the UK is steaming ahead to a bright future and these issues are not down to their master plan at all. I suggest we all keep a keen eye out for flying pigs😤

johnnyone

The trouble with waiting is that it looks as though the pound shall weaken further. I bought at around 1.27 but at the time I was told the pound would strengthen. (people were still in memory of the 1.60 rate.). I chose not to wait and in financial terms I am down simply because my money would have been invested in the stock market, via my pension fund, that has seen some great gains. In actual fact at the time the euro fell by around 10 cents and then strengthened reaching 1.40. The point is there is never a right time and it is primarily luck unless you are an expert (are there any?)not just on exchange rates, but also on property prices and other investment opportunities.etc.
You only have to look at some urbanisations that have suffered dramatic falls from peak values (up to 66%). Even if you exchanged at 1.40 you are still sitting on a significant loss.
None of this matters if you enjoy your property and have no intention of selling. If it is a lifestyle investment rather than financial investment I would say continue to go for it. The fall in the pound from May is around 8% so you may be able to renegotiate the price with the seller as it remains a buyers market.

KieronF

Sadly our seller is completely inflexible. When we started the buying process our funds allowed for the purchase cost, taxes and legals plus a cushion to allow for minor refurbishments and furniture. The volatile exchange rate has completely eroded that cushion and more, so we could find ourselves paying our deposit within the week but facing an unknown outcome for a few months waiting to complete while the GBP/Euro rate collapses even further. It is too much of a gamble at the moment so we will make the move anyway, but will rent for the winter and be ready, on the ground with our funds in Euros waiting to move as soon as we see something suitable.

johnnyone

If you are concerned about future exchange rates have you considered fixing the rate now with an fx dealer? I have never done this but it may it be an option for you.This would give you some peace of mind.
Whatever you decide I wish you well.

KieronF

The trouble with rate fixing now is that the rate will only get worse - if things are too expensive now, they will only remain so within the window in which the rate is held. Fixing is a great idea when the rate can likely go either way. Sadly, when the rate is heading down towards parity it would be of no use.

bobd22

I agree Kidron you would have needed to fix the rate last year . When we bought our house 2007 I had a 15'year mortgage that I always intended to pay off on retirement after 3 years. Of course during that time rate fell from 1.40 to parity . I had failed to set the rate as it fell believing it would go up and down. When it reached parity (actual exchange rate) I got very worried. Luckily it rose again and I set a rate which I knew that may not be the highest but that I could pay off the mortgage with the amount of sterling I had set aside. It paid off and 2 months prior to retirement I could make the exchange and clear the mortgage. I think you have done the right thing may be a disappointment but you will not have the sleepless nights worrying as the pound drops. Of course it comes down to speaking with hindsight when what we need is foresight and fix a rate when it is up, however we always think, it may go higher and miss the boat. Reality is it sometimes falls very quickly leaving little time to manoeuvre. When it picks up again you can at least re calculate at your leisure.

Novocastrian

Hang on. The euro is worth about 7p more now than it was in May. If your £ price has increased by £38k then the price of your dream home is and was of the order of £500k.

Are you buying the Alhambra??

lurchio

To get a 'feeling' of the Brexit effect on exchange rates, did anyone watch Sky news for a few hours on Brexit DAY? Notice the little rate 'widget' in the corner of the screen TUMBLING? The coup de grace was Carney's speech that day, it tumbled in real time then, it was like a countdown to watch.Its still more or less down there. Anyone that says it's not Brexit causing the majority of the problems here is being delusional to say the least.Never mind, come the great recovery, Britain will prevail again..... We'll show 'em eh? Eh? Come on, eh? Hello? Anyone there?

Novocastrian

Nadie, nessuno, niemand, personne.

bobd22

Totally agree but some will just blame others and refer to remoaners rather than admit they have screwed up.

KieronF

Not quite, but property in Menorca is quite expensive compared to the mainland.