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Updated 19 Feb 2016

The European economy has some issues surrounding it and this has led to many UK property investors looking elsewhere. Places such as France, Spain and Portugal are all appealing and with the strength of the pound, investors have options. However, the UK referendum on Europe is a cause for concern and with a possible change in the interest rate imminent; many currencies are going to become unstable. So, the question remains, should UK investors be considering European property and how can they protect themselves from currency changes. 

The cost of European property

UK investors are still interested in the property markets in Spain, France and Portugal despite them being hit hard. Properties in France are 10% lower than they were in 2011 and Spanish properties are 35% lower, the situation in Portugal is worse. However, areas such as Bulgaria and Romania are receiving more interest due to the issues with the Euro. 

Many properties have been repossessed in Spain and Portugal and banks are having to sell these properties. In recent months, property investment companies have started picking up properties that have been repossessed and banks are happy to support these investments. Many people believe that the European property market has moved away from the darker days but some feel differently.

Unstable exchange rates

Over the past ten years, exchange rates have varied massively as a result of economic problems and local issues. It is possible to protect yourself from exchange rate volatility through the use of forward contracts but opting to use these will require expert advice. 

For many investors who have been in this industry for some time, they would have seen how quickly house prices can change as a result of changes to the exchange rate. Therefore, when the time comes for you to look at property overseas, the currency markets have to be taken into consideration. Each government throughout the world has brought in economic measures that are only for their local market and this means that economies are recovering at different rates. This will further add to the instability and doubt surrounding the currency markets. 

Investing Overseas

When looking at property abroad, there are a number of problems that have to be considered but the prices in Spain, France and Portugal, when compared to the UK are extremely attractive. The change in currency has certainly been the tipping point for investors who are now looking to invest overseas. 

However, in comparison to the UK, a number of European property markets are tempting but there is no guarantee that the whole of Europe will make a recovery in the immediate future. There are still questions being asked about the Euro and how it will perform in the future. There are still changes that could occur within the make-up of Europe and the UK referendum is just around the corner which is causing a stir. These markets are certainly an exciting prospect for investors who are looking to purchase low priced property.

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