strength of Euro

[Hillsider]

This is my first post although I have been reading the many helpful comments since I first decided to move to France. I am (was) planning a second viewing trip early in the new year to purchase a home in the Vendee (Marais area). When I was out in early October, the exchange rate I was offered by a currency broker was 144 euros to the pound. The same broker is currently offering 137. This makes a huge difference to the cost of the properties I have in mind. Can any long term residents remember such a large differential occuring in such a short time? Are you confident the rate will ease as this will also have implications for those of us who will rely on pensions etc being paid in sterling?

On a different tack : when I was out looking in October, I viewed a property that was outwith my price range but the agency (AVIS) insisted that it could be had for a substantial discount as it had been for sale for six months. I put in an offer which I am told was refused because a client from another agency had submitted an offer close to the full purchase price. I was contacted by AVIS next day suggesting that if I put in an offer close to the full purchase price it would probably be accepted. Six weeks later, I still see this property being advertised on several agent's sites. If an offer close to the full purchase price had been submitted, I would have thought it would have been accepted. I suspect sharp practice. I would make an offer through one of the other agencies marketing the property (cheaper than AVIS incidentally by 2000 euro) but I believe that because I signed a paper with AVIS, I am restricted to using their agency for that particular property. Can anyone advise if this is the case?

On reading the recent posts about the quality of French estate agents, I find it bizarre that when multiple agencies are marketing a property, the prices all differ, sometimes substantially. The most marked discrepancy I have seen is a property being marketed by one agency at 210,000 euro and another at 226,000. You would think they would look at the websites they advertise on to see what the competiton is up to!!

[Benjamin]

Welcome to thr forum Hillsider.

Yr para 1: I doubt if anyone on here can predict which way the currency will go. There are people out there paid zillions to work this out and still they get it wrong. If you rely on income in one currency and then you have expenditure in another you should always have a contingency built in for fluctuations in the exchange rates. Just ask the Americans (and others paid in US$) who frequent this forum.

Para 2: Have you asked the other agencies listing this property if it is still actually for sale. Sometimes a property can be sold and the seller never tells the myriad of other agencies that they instructed that it is no longer for sale. If it is then you are commited to buying through the original agency if you signed a bon de visite. You could ignore this and hope the original agent never finds out but if they do then you could be pursued for a second lot of commission. Go back to the first agency and tell them very strongly to stop messing you about if it is still for sale and then offer a lower price still to take into account the currency variation and ask them to explain to the vendor why you are doing that.

Para 3: Yes this does happen but you should satisfy yourself that each agent is including the extras i e their commission, notaires fees when you're comparing prices.

Don't forget to build in health costs if this applies to you.

Good luck in your search.

[DerekJ]

On the exchange rate question... there was thread on this topic last week and Benjamin is ceratinly correct that no one really knows.....

However, I just got a weekly update from Halo Financial who are now suggesting that if the Pound drops below the 1.3787 level (at which it was previously supported - apparently) they seem to see no reason why it wouldn't drop further down to 1.3204 (not quite sure the significance of that specific number.

But, from hearing a few analysts speaking it does sound a bit gloomy for the pound.

I'm in a similar position to you and if the pound does drop to the kind of levels being suggested,  we will put French house hunting on hold.

[Quillan]

Welcome to the forum.

Currency -  It does go up and down. When we bought France had just changed to the Euro and it was 1.60, when we had to move our money it had dropped to about 1.52, a big difference. We had no choice so we did the money exchange the following day and it went up to 1.62 (the highest I think it has ever been) on the day so we did really well. Actually more to the point we were just incredibly lucky, it's a bit like putting money on a horse. All you can do is look round the market and see who does the best deal.

House prices can vary a bit between agents because the seller can negotiate the commission (well you can round here) so it's possible that the fluctuation can be down to the rate the seller has negotiated. Some agents still do not add the commission to the price of the house so the lower figure you quoted could be without commission which you have to pay. You need to check these things very carefully. Sometimes the agent will drop their commission a bit to get the sale through.

In France it is acceptable for a house to be on the market for up to or more than a year. Ours was on the market for 18 months before we bought it.

Good luck.

[Llwyncelyn]

Hi Quillan we were very lucky we bought at 1.6775 and now upon selling here wish to move funds back to the UK and that is what I am going to do and as quickly as I can.

We are still remaining in France but times both here and back in the UK are going to get tougher and Northern Rock today went through the floor and there is some £24 billion of our money in that lot.

[caramac]

[quote user="Llwyncelyn"]

and there is some £24 billion of our money in that lot.

[/quote]

Oh Llwyncelyn!   I am so sorry!   That's an awful lot to lose.....[:-))]

[Quillan]

[quote user="caramac"][quote user="Llwyncelyn"]

and there is some £24 billion of our money in that lot.

[/quote]

Oh Llwyncelyn!   I am so sorry!   That's an awful lot to lose.....[:-))]

[/quote]

I think he is talking about the amount of UK tax payers money that has been 'lent' to NR to help it get out the sh one t.

[BJSLIV]

 Llwyncelyn

I didn't realise you were leaving France altogether, I thought you were just planning a move further south.

 

[woody2122]

Bought at    1.6775  that was more than very lucky, that must have been back in 2000 or 2001  for a couple of hours, why would you move funds back as quickly as you can, wouldnt you wait to see if the euro gets stronger to get more pounds for your euros 

[Sprogster]

As someone who works in financial services, I can confirm there is increasing bearish market sentiment towards the value of the £ against the Euro and 1.32 is a destinct possibility with the spot rate around 1.37 today.

Reasons are varied but mainly due to expectations of reducing £ interest rates next year, which makes the £ less attractive to foreign investors and UK trade deficit.

I would not be in a hurry to buy as the UK and French property market is softening and will continue to do so for some time yet, the only question is by how much. Add to the equation that 60% of foreign residential property buyers in France are Brits and tend to buy older properties that the French don't, you can see the downside risk if the £ continues to weaken on top of the ongong credit crunch that makes mortgages more expensive and difficult to obtain. 

[Jacqui Too]

We bought our house last January when the rates were much more favourable around 1.49 - 1.50 and to do the same transaction today at 1.37 would cost us at least £11,000.00 pounds more. we resisted converting and sending over more money for the renovation  because although the rate was good at that time our money would have sat in our French bank account earning us no interest. We left it in a high interest account and that has paid out very good interest. As the pound falls interest rates rise, so if by the time we do have to send money over next year hopefully the exchange rate will have improved[Www] and if not at least we will have some the extra money to lessen the shortfall

Jackie

[Pierre ZFP]

I see that the American singer 50cents has been 'dissing' the dollar and now wants to be paid in a 'strong' currency like Euros.  If he does, will it mean he will have to change his name to '34cents' ?  [:P]

[Patf]

Even this June the exchange rate was a lot better ie we transferred £5000 and got 7350e. Yesterday the same amount transferred was only about 6900e - a big drop for us. But if it's heading for 1.32, better not to wait. Anyway we need it now.

[Chancer]

Not in the same league as buying a house but I bought 8 windows and volet roulants in the last week totalling E1397, they were debited to my nationwide card at 1.397 whereas I had been getting an average of 1.44 so they cost me an extra 30 quid or 3% but the movement was quite sudden.

[Wilko]

Hi Sprogster

Add to the equation that 60% of foreign residential property buyers in France are Brits.

Where does this stat come from ?

Wilko

[Crevette]

>As the pound falls interest rates rise, so if by the time we do have to send money over next year hopefully the exchange rate will have improved and if not at least we will have some the extra money to lessen the shortfall

I think the opposite is true. If interest rates are high in a country then it attracts more investment and makes the currency stronger and more attractive. If rates fall then the reverse is true.

A lot of the recent decline had been due to the fact that the BOE have made it clear that interest rates in the UK are likely to be cut by a half point next year.

-Rob-

[Quillan]

[quote user="Wilko"]

Hi Sprogster

Add to the equation that 60% of foreign residential property buyers in France are Brits.

Where does this stat come from ?

Wilko

[/quote]

Round here we are outnumbered 2 to 1 by Belgium's. The thing is though is most average Brits can't tell the difference between Belgium French and French French if you can understand what I mean. My neighbours can spot them a mile off.

[Sprogster]

Hi Wilko,

This is a French government statistic and has been widely quoted in the press. 

Not surprising really, as it has been the buoyant UK property market that has been the facilitator in enabling Brits to realise equity from their UK property and buy abroad in such large numbers.

Also buying old property in rural France seems to be a strangely British love affair, with other Europeans such as the Germans being more influenced by climate and the need to get further south.

You do get other buyers such as Belgians and the Irish but these are countries with small populations, so the numbers are relatively low by comparison. 

[Jacqui Too]

[quote user="Crevette"]

>As the pound falls interest rates rise, so if by the time we do have to send money over next year hopefully the exchange rate will have improved and if not at least we will have some the extra money to lessen the shortfall

I think the opposite is true. If interest rates are high in a country then it attracts more investment and makes the currency stronger and more attractive. If rates fall then the reverse is true.

-Rob-[/quote]

I see what you are saying. But I noted last winter that as the base rate went up so the exchange rate improved for a short time, that base rate rise allowed the interest rates on my savings to rise therefore I was earning more money. Since January the exchange rates have steadily dropped and I am now paying more for my euros which is lessened by the fact that my money has been earning more[blink]

My statement may not be correct, but it is how things have worked out for me.

Jackie

 

[Gardian]

I've read loads of threads on here on this subject and lots of posts from many clearly well-informed individuals.

And do you know?  Like most (I suspect), I'm none the ****** wiser.  All I know is that, for most of us, we have little real control over when (and therefore) what the rate will be, when we buy our €'s for our house purchase, annual housekeeping, or occasional top-up from the UK. When the time comes that you have to buy, you have to buy. Sometimes you do OK, sometimes you take a hit.

Now if the UK (sensibly in my view) adopted the Euro, all of this would be a non-debate. 

[Ron Avery]

"Now if the UK (sensibly in my view) adopted the Euro, all of this would be a non-debate". 

Hear hear[:D]

[AnOther]

Gardian:

You're absoutely right of course and it is something of a futile discussion, the rate is what it is and has to be lived with.

A bit like the weather you could say, you can hope for the best but should be prepared for the worst as ultimately you have absolutely zero influence over either and can only take precautions to mitigate against the excesses. 

As for the UK adopting the Euro, I think it depends on ones perspective.

As a wage earner paid in £ but living and travelling in the eurozone I'd welcome the stability it would bring. Were I still a UK resident though I might have a different view and certainly, from a the simple standpoint of interest earned on UK bank deposits and other investments, I know whose rates I'd rather be profiting from [:D]

As a French resident that has to be offset against a falling exchange rate of course [:(]

The one absolute certainty is that you can't win whatever you do.......!

[bigears]

hi

I cannot see the UK adopting the euro.  An opportunity  was missed a few years ago to sell adopting the euro to the british public.  I don't hear any mention of it today.  The british press used to ridicule the euro as a serious currency, not any longer.  Its a good time for people, who have the facility to move money from their euro account to their sterling account.

[Logan]

During political discussions when it looked like Blair was intending to take Britain into the Euro the finance ministers of the EU debated the rate at which it was likely Sterling would be set in stone. Britain wanted 0.750 euros. The EU suggested 0.720. Today Sterling is 0.715 euros. With Sterling merged into euros anyone with a UK Sterling income would effectively be poorer in this event since it is effectively a devaluation on consistently high historical market rates. In my opinion the currency markets offer a better deal in the medium to long term for Sterling incomes in the eurozone. Interest rates are also historically higher than the eurozone producing better yields on long term investments. The current strength of the euro will do nothing but damage the european economies growth eventually. Unfortunately speculators only think short term. The ECB should act now and reduce interest rates to offset future economic stagnation. However because of the high oil price which is traded in dollars that's unlikely in the medium term.     

[Gardian]

[quote user="ErnieY"]As for the UK adopting the Euro, I think it depends on ones perspective.[/quote]

Just wanted to make it clear that my view about the desirability of the UK adopting the Euro is much less a selfish motive, than a view over the difficulties for UK exporters and importers.

I remember very well talking to the Finance Director at one of my previous employers and him complaining about the 'punt' that he and his team had to take every year at budget time over which way the £ - € was going to go. It was an export-dependent business and profits were always at risk of being wiped out by an adverse move in the rate.

I agree though that it's way off the agenda for the foreseeable future.