Exchange Rate
#16
Banned
Joined: Aug 2008
Posts: 22,348
Re: Exchange Rate
How can UK homeowners seriously consider selling up and move to Australia while house prices and value of the pound are the way that they are right now?
Lets consider these figures: The drop in value of a fairly typical house from £260000 at its peak to £225000 now. "Loss" = £35000 @ conservative historical exchange rate of 2.5 to the pound = Au$87500
Transfer £225000 at 1.92 = Au$432000 vs transfer £225000 at 2.50 = Au$562500. "Loss" = Au$130500
Net "loss" = Au$218000.
It seems to me that the dilemma is this: How long will it take to absorb that kind of "loss" and how long will it take for house prices and exchange rates to return to previous levels?
Renting out the UK property appears to be the way to go.
Lets consider these figures: The drop in value of a fairly typical house from £260000 at its peak to £225000 now. "Loss" = £35000 @ conservative historical exchange rate of 2.5 to the pound = Au$87500
Transfer £225000 at 1.92 = Au$432000 vs transfer £225000 at 2.50 = Au$562500. "Loss" = Au$130500
Net "loss" = Au$218000.
It seems to me that the dilemma is this: How long will it take to absorb that kind of "loss" and how long will it take for house prices and exchange rates to return to previous levels?
Renting out the UK property appears to be the way to go.
#17
Peace Frog
Joined: Jul 2009
Location: South London orginally from Manchester
Posts: 175
Re: Exchange Rate
How can UK homeowners seriously consider selling up and move to Australia while house prices and value of the pound are the way that they are right now?
Lets consider these figures: The drop in value of a fairly typical house from £260000 at its peak to £225000 now. "Loss" = £35000 @ conservative historical exchange rate of 2.5 to the pound = Au$87500
Transfer £225000 at 1.92 = Au$432000 vs transfer £225000 at 2.50 = Au$562500. "Loss" = Au$130500
Net "loss" = Au$218000.
It seems to me that the dilemma is this: How long will it take to absorb that kind of "loss" and how long will it take for house prices and exchange rates to return to previous levels?
Renting out the UK property appears to be the way to go.
Lets consider these figures: The drop in value of a fairly typical house from £260000 at its peak to £225000 now. "Loss" = £35000 @ conservative historical exchange rate of 2.5 to the pound = Au$87500
Transfer £225000 at 1.92 = Au$432000 vs transfer £225000 at 2.50 = Au$562500. "Loss" = Au$130500
Net "loss" = Au$218000.
It seems to me that the dilemma is this: How long will it take to absorb that kind of "loss" and how long will it take for house prices and exchange rates to return to previous levels?
Renting out the UK property appears to be the way to go.
#18
Re: Exchange Rate
We've just sold our UK property, went quite quickly and we got more for it that we would have done when we moved out (Jan 07) - obviously not as much as when it peaked but we've done pretty good for the current market.
But............yep we'll loose out if we bring it over now - just as we feel we are ready to buy here but we'll also won't keep up if we leave it in the UK because of rubbish interest rates unless we want to tie it up for 3-5 years.
It really is a big dilemma at the moment and it's doing my head in! We are trying not to have a huge mortgage and we don't want a mansion just somewhere nice in the area we want to live in, not asking much!
Renting out in the UK is okay if you are lucky. We did it for 2.5 years and it was a total pain in the ****. We just about broke even until the rates went down but we never had our pick of tenants, just had to take what we could get - the two students almost trashed the place. Then rents went up -yeah then then come down - boo! In the end it was just tooo much stress and we were lucky in the fact that we've been going back once a year to keep an eye on the place. We had reasonable agents but even so they let a few things slip through the net all for 15% a month! Bear in mind this is also was a very nice apartment, in a very nice setting. Having said that our friends who went overseas for 4 years had the same tenants and hardly any problems - luck of the draw but just keep these things in mind.
Keep pestering your agents, get photos etc and make them do a clean and take it out of the tenants bond if you are not happy with the state of the place -maybe get a rellie or friend to do a check after each tenant.
Hope this helps if you decide to rent out. Being a tenanat in Oz has certainly helped to be a landlord in the UK!
Now I just need $3 to the pound and I'll be a happy Koala in my own tree!
KK
But............yep we'll loose out if we bring it over now - just as we feel we are ready to buy here but we'll also won't keep up if we leave it in the UK because of rubbish interest rates unless we want to tie it up for 3-5 years.
It really is a big dilemma at the moment and it's doing my head in! We are trying not to have a huge mortgage and we don't want a mansion just somewhere nice in the area we want to live in, not asking much!
Renting out in the UK is okay if you are lucky. We did it for 2.5 years and it was a total pain in the ****. We just about broke even until the rates went down but we never had our pick of tenants, just had to take what we could get - the two students almost trashed the place. Then rents went up -yeah then then come down - boo! In the end it was just tooo much stress and we were lucky in the fact that we've been going back once a year to keep an eye on the place. We had reasonable agents but even so they let a few things slip through the net all for 15% a month! Bear in mind this is also was a very nice apartment, in a very nice setting. Having said that our friends who went overseas for 4 years had the same tenants and hardly any problems - luck of the draw but just keep these things in mind.
Keep pestering your agents, get photos etc and make them do a clean and take it out of the tenants bond if you are not happy with the state of the place -maybe get a rellie or friend to do a check after each tenant.
Hope this helps if you decide to rent out. Being a tenanat in Oz has certainly helped to be a landlord in the UK!
Now I just need $3 to the pound and I'll be a happy Koala in my own tree!
KK
#19
Banned
Joined: Aug 2008
Posts: 22,348
Re: Exchange Rate
We've just sold our UK property, went quite quickly and we got more for it that we would have done when we moved out (Jan 07) - obviously not as much as when it peaked but we've done pretty good for the current market.
But............yep we'll loose out if we bring it over now - just as we feel we are ready to buy here but we'll also won't keep up if we leave it in the UK because of rubbish interest rates unless we want to tie it up for 3-5 years.
It really is a big dilemma at the moment and it's doing my head in! We are trying not to have a huge mortgage and we don't want a mansion just somewhere nice in the area we want to live in, not asking much!
Renting out in the UK is okay if you are lucky. We did it for 2.5 years and it was a total pain in the ****. We just about broke even until the rates went down but we never had our pick of tenants, just had to take what we could get - the two students almost trashed the place. Then rents went up -yeah then then come down - boo! In the end it was just tooo much stress and we were lucky in the fact that we've been going back once a year to keep an eye on the place. We had reasonable agents but even so they let a few things slip through the net all for 15% a month! Bear in mind this is also was a very nice apartment, in a very nice setting. Having said that our friends who went overseas for 4 years had the same tenants and hardly any problems - luck of the draw but just keep these things in mind.
Keep pestering your agents, get photos etc and make them do a clean and take it out of the tenants bond if you are not happy with the state of the place -maybe get a rellie or friend to do a check after each tenant.
Hope this helps if you decide to rent out. Being a tenanat in Oz has certainly helped to be a landlord in the UK!
Now I just need $3 to the pound and I'll be a happy Koala in my own tree!
KK
But............yep we'll loose out if we bring it over now - just as we feel we are ready to buy here but we'll also won't keep up if we leave it in the UK because of rubbish interest rates unless we want to tie it up for 3-5 years.
It really is a big dilemma at the moment and it's doing my head in! We are trying not to have a huge mortgage and we don't want a mansion just somewhere nice in the area we want to live in, not asking much!
Renting out in the UK is okay if you are lucky. We did it for 2.5 years and it was a total pain in the ****. We just about broke even until the rates went down but we never had our pick of tenants, just had to take what we could get - the two students almost trashed the place. Then rents went up -yeah then then come down - boo! In the end it was just tooo much stress and we were lucky in the fact that we've been going back once a year to keep an eye on the place. We had reasonable agents but even so they let a few things slip through the net all for 15% a month! Bear in mind this is also was a very nice apartment, in a very nice setting. Having said that our friends who went overseas for 4 years had the same tenants and hardly any problems - luck of the draw but just keep these things in mind.
Keep pestering your agents, get photos etc and make them do a clean and take it out of the tenants bond if you are not happy with the state of the place -maybe get a rellie or friend to do a check after each tenant.
Hope this helps if you decide to rent out. Being a tenanat in Oz has certainly helped to be a landlord in the UK!
Now I just need $3 to the pound and I'll be a happy Koala in my own tree!
KK
Good luck with your decision, Kim - it's a tough one
#20
Peace Frog
Joined: Jul 2009
Location: South London orginally from Manchester
Posts: 175
Re: Exchange Rate
There seems to be no straightforward low-risk, hassle-free solution other than abandoning the "Australia project" altogether. The house has sold at a reasonable(ish) price for the current climate so we could either jump back onto the property ladder and go for something a bit more upmarket/suitable for renting or hold onto our sterling for up to 12 months in the hope that it's value will improve. Or we could just stay put in the UK . I think it's family conference time .
Good luck with your decision, Kim - it's a tough one
Good luck with your decision, Kim - it's a tough one
Its a tough one, we are in a similar dilemma. Think we are going to stick it out in the U.K. for another yearish put the house on the market next april time. Hoping that the exchange rate might go up, think its on a big downer at the minute. Having done the renting out houses before its the luck of the draw.
#21
Re: Exchange Rate
Its a tough one, we are in a similar dilemma. Think we are going to stick it out in the U.K. for another yearish put the house on the market next april time. Hoping that the exchange rate might go up, think its on a big downer at the minute. Having done the renting out houses before its the luck of the draw.
Current trend and indications show little sign of any change in pound floundering, in the face of strong Australian Economy. That's the assessment, not my opinion.
It requires a turnaround in UK economical situation, i.e. growth in supply vs demand for a sustained period before you can argue that pound will be back to where it was beginning of this year (not the strongest position but much better than where it is now).
There is some good indication of recovery in UK, specially in the housing sector, but these are like the offshoots in spring. Small and not yet fledged.
I am in the same boat as most of you. I have a property in UK which for various reasons, not least because I would get pittance for it in this market, have had to put it up for renting.
Just like you guys, my fingers are crossed to...
#22
Peace Frog
Joined: Jul 2009
Location: South London orginally from Manchester
Posts: 175
Re: Exchange Rate
Current trend and indications show little sign of any change in pound floundering, in the face of strong Australian Economy. That's the assessment, not my opinion.
It requires a turnaround in UK economical situation, i.e. growth in supply vs demand for a sustained period before you can argue that pound will be back to where it was beginning of this year (not the strongest position but much better than where it is now).
There is some good indication of recovery in UK, specially in the housing sector, but these are like the offshoots in spring. Small and not yet fledged.
I am in the same boat as most of you. I have a property in UK which for various reasons, not least because I would get pittance for it in this market, have had to put it up for renting.
Just like you guys, my fingers are crossed to...
It requires a turnaround in UK economical situation, i.e. growth in supply vs demand for a sustained period before you can argue that pound will be back to where it was beginning of this year (not the strongest position but much better than where it is now).
There is some good indication of recovery in UK, specially in the housing sector, but these are like the offshoots in spring. Small and not yet fledged.
I am in the same boat as most of you. I have a property in UK which for various reasons, not least because I would get pittance for it in this market, have had to put it up for renting.
Just like you guys, my fingers are crossed to...
So fingers crossed indeed...
#23
Banned
Joined: Aug 2008
Posts: 22,348
Re: Exchange Rate
Its a tough one, we are in a similar dilemma. Think we are going to stick it out in the U.K. for another yearish put the house on the market next april time. Hoping that the exchange rate might go up, think its on a big downer at the minute. Having done the renting out houses before its the luck of the draw.
It would be interesting to know how the increase in house prices has been measured. My theory is there's such a short supply of low end housing that people are now nibbling at the slightly more expensive properties - hence the increase in average selling price.
#24
Re: Exchange Rate
US Dollar : Up 11%
Euro : Up 9%
Japanese Yen : Up 14%
Swiss Franc : Up 10%
Canadian Dollar : Up 1%
and then.....
Australian Dollar : Down 6%
....this is the problem I have with the harbringers of doom and their predications for the UK based solely on the AUD exchange rate. A change in the pound AUD exchange rate has as much to do with what's happening in Aus as the UK. The writing is on the wall for economic recovery around the world - even the UK, and much of it is already priced in I'd say.
#25
Re: Exchange Rate
I am not sure about the other currencies, but for an expat just moved from UK, with most of my assets still over there, and being in Australia, I am most interested obviously to GBP againts AU$.
As you say, GBP is 6% down.
Even against US$, the Australian Dollar is solid.
Whatever we may say about Australia, I do admire how it handled the recession.
It put the people first before corporations, and in the end, it's the people who matter.
#26
Peace Frog
Joined: Jul 2009
Location: South London orginally from Manchester
Posts: 175
Re: Exchange Rate
The pound in general hasn't weakened since the start of the year though - in fact it has strengthened. Compare its value to other major currencies since Jan 1st:
US Dollar : Up 11%
Euro : Up 9%
Japanese Yen : Up 14%
Swiss Franc : Up 10%
Canadian Dollar : Up 1%
and then.....
Australian Dollar : Down 6%
....this is the problem I have with the harbringers of doom and their predications for the UK based solely on the AUD exchange rate. A change in the pound AUD exchange rate has as much to do with what's happening in Aus as the UK. The writing is on the wall for economic recovery around the world - even the UK, and much of it is already priced in I'd say.
US Dollar : Up 11%
Euro : Up 9%
Japanese Yen : Up 14%
Swiss Franc : Up 10%
Canadian Dollar : Up 1%
and then.....
Australian Dollar : Down 6%
....this is the problem I have with the harbringers of doom and their predications for the UK based solely on the AUD exchange rate. A change in the pound AUD exchange rate has as much to do with what's happening in Aus as the UK. The writing is on the wall for economic recovery around the world - even the UK, and much of it is already priced in I'd say.
#27
Forum Regular
Joined: Jun 2009
Posts: 66
Re: Exchange Rate
How can UK homeowners seriously consider selling up and move to Australia while house prices and value of the pound are the way that they are right now?
Lets consider these figures: The drop in value of a fairly typical house from £260000 at its peak to £225000 now. "Loss" = £35000 @ conservative historical exchange rate of 2.5 to the pound = Au$87500
Transfer £225000 at 1.92 = Au$432000 vs transfer £225000 at 2.50 = Au$562500. "Loss" = Au$130500
Net "loss" = Au$218000.
It seems to me that the dilemma is this: How long will it take to absorb that kind of "loss" and how long will it take for house prices and exchange rates to return to previous levels?
Renting out the UK property appears to be the way to go.
Lets consider these figures: The drop in value of a fairly typical house from £260000 at its peak to £225000 now. "Loss" = £35000 @ conservative historical exchange rate of 2.5 to the pound = Au$87500
Transfer £225000 at 1.92 = Au$432000 vs transfer £225000 at 2.50 = Au$562500. "Loss" = Au$130500
Net "loss" = Au$218000.
It seems to me that the dilemma is this: How long will it take to absorb that kind of "loss" and how long will it take for house prices and exchange rates to return to previous levels?
Renting out the UK property appears to be the way to go.
What is more of an issue is the exchange rate, its so hard to choose what to do and its really just down to everyones circumstance in terms of how long they can wait, as at the moment seeing it much above 2.00 looks unlikely
#30
Banned
Joined: Aug 2008
Posts: 22,348
Re: Exchange Rate
I'm sorry but saying that you "lost" £35,000 of house value fomr the peak isnt realistic, in truth most peple have actually gained a fortune on their property fomr twhen they originally bought it. Only those who bought 2 years ago are in trouble. 14 years of increasing value and 2 of decreasing is something that most people would be happy with in any investment.
What is more of an issue is the exchange rate, its so hard to choose what to do and its really just down to everyones circumstance in terms of how long they can wait, as at the moment seeing it much above 2.00 looks unlikely
What is more of an issue is the exchange rate, its so hard to choose what to do and its really just down to everyones circumstance in terms of how long they can wait, as at the moment seeing it much above 2.00 looks unlikely
We have bought another because (among other reasons) a few years down the line if capital gains comes into the equation it will be based on todays house prices and not those of 12 years ago. The exchange rate will remain poor for the foreseeable future so no point in holding out for improvements on that. House prices will begin rising again to compensate for the weak pound.