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Expat Investor : August 2009
EXPAT CURRENCIES British expats struggle with falling sterling Foreign Currency Direct explains how expats are coping with the falling pound. The changing fortunes of the pound have increased the cost of moving overseas significantly in the last six months, and Britons already living overseas on English savings or pensions are experiencing significant price hikes. With the value of the pound reaching record lows against the euro in January, the cost of living as an expat in Europe remains almost 19% more expensive than it was back in November 2008. Britons considering a move to the US are in for even more of a shock. With the dollar gaining almost 20% against the pound in the last six months, a British buyer will now pay £32,303 more for the average property in the US, and £373 more for a ‘basket' of 41 purchases common to a British person living overseas, including essential groceries, services, meals out and leisure activities. Back in February this year, sterling was holding its own against the Australian and New Zealand dollars, meaning that some British expats could enjoy a cost of living that had actually fallen over a six month period (-0.67% and -3.35% respectively). Now that has changed, sterling has become weaker and the cost of living has therefore increased SUMMARY OF RESULTS: Top 10 Countries where Britons would most like to own a property France Portugal Spain Greece Cyprus Italy Australia New Zealand Canada across every expat hotspot during the last six months, some more significantly than others. The research by Foreign Currency Direct, a specialist foreign currency broker, compares how exchange rate fluctuations have impacted the cost of essential and non-essential purchases common to a British person living overseas in the top ten destinations for British expats. The extent to which Britons are likely to feel these price changes varies significantly according to the cost of living within their country of residence. The American dream now comes with a higher price tag ? The pound’s poor performance against the US dollar means that costs in the US have increased by 19% – leaving the US now equal with France as the most expensive expat destination. ? A medium Cappuccino in Starbucks in the US (US$4.84) now costs 54p more than it did six months ago (£3.27 compared with £2.74). ? The cost of a basket of essential groceries, such as eggs, milk and bread costing US$7.07 now costs 78p more than it did six months ago (£4.77 compared with £3.99). ? An electricity bill, which averages US$343 per quarter in the US, will now cost a British expat £38.01 more to pay off than six months ago (£231.98 compared with £193.97). ? The cost of a three-course meal for two at an American family restaurant will now set a British couple back over £8 more than it did last November (£49.10 compared with £41.05). ? The American classic, two medium-sized McDonald’s Quarter Pounder Extra Value Meals now costs a couple £1.42 more than it did six months ago (US$12.81 is now equivalent to £8.66 compared with £7.24 in November). Prices Jump across the Channel The cost of buying a property in European hotspots for British expats has increased by an average of more than £20,799 in the last six months due to exchange rate fluctuations. (In February this year the average increase was £15,000). The British buyer will have to pay £31,576 more for a property in Spain, £24,331 more for a property in Cyprus and £18,703 more for a property in France. Exchange rate fluctuations have Exchange rate to the GBP in Change in the cost of 41 expenses November 2008 and April 2009 common to a British expat over the last six months due to exchange fluctuations (£) +439.48 1.28 EUR / 1.10 EUR From 2,684.53 to 3,124.01 From 114,296 to 133,000 From 8.10 to 9.42 1.28 EUR / 1.10 EUR From 2,259.42 to 2,629.33 From 69,171.88 to 80,490.91 From 4.54 to 5.28 1.28 EUR / 1.10 EUR From 2,229.73 to 2,594.74 From 192,968.75 to 224,545.45 From 3.02 to 3.52 1.28 EUR / 1.10 EUR From 2,063.69 to 2,401.56 From 95,000.00 to 110,545.45 From 6.51 to 7.58 1.28 EUR / 1.10 EUR From 1,847.50 to 2,150.03 From 148,695.31 to 173,027.27 From 5.85 to 6.80 1.28 EUR / 1.10 EUR From 1,728.26 to 2,011.24 From 142,500.00 to 165,818.18 From 4.67 to 5.43 2.43 AUD / 2.09 AUD From 1,631.75 to 1,897.25 From 184,221.81 to 214,190.91 From 4.24 to 4.93 2.69 NZD / 2.52 NZD From 1,628.62 to 1,738 From 122,118.96 to 130,357 From 4.25 to 4.53 1.91 CAD / 1.84 CAD From 2,129.58 to 2,210.62 From 147,178.01 to 152,777.17 From 3.83 to 3.97 July/August 2009 ? EXPAT INVESTOR 19 +109.92 +81.04 +8,238 +5,599.16 +0.29 +0.15 6.00 3.00 +265.50 +29,969.10 +0.69 16.00 +282.99 +23,318.18 +0.76 16.00 +302.47 +24,331.50 +0.96 16.00 +337.87 +15,545.45 +1.07 16.00 +365.01 +31,576.70 +.0.49 16.00 +369.91 had the biggest impact on British expats already living in France and Portugal, where the day-to-day cost of living is higher than in other European counties. The costs of goods, services and hobbies typical of a British person living abroad have increased from £2,684 to £3,124 in France and from £2,259 to £2,629 in Portugal. The cost of a basket of essential groceries, such as milk, bread, eggs, potatoes and sugar, costing €10.36 has increased by more than a pound from £8.10 to £9.42 in France in the last six months. A bag of 200 English tea bags costing €14.89 in Spain will now set British expats back £13.54, compared to £11.63 last November. Cheaper in Canada Currency fluctuation has increased the cost of living in Canada by only three per cent in the last six months, the smallest change of all expat hotspots.With sterling strengthening against the Canadian Dollar, British expats living there are enjoying more for their pound. The average cost of a property in Canada has increased by only £5,599 in six months, a long way from the £32,303 increase in the US. Peter S. Ellis, Chief Executive of Change in the cost of a house over the last six months +18,703.13 Change in the cost of essential groceries in the last due to exchange fluctuations (£) six months due to exchange rate fluctuations (£) +1.32 +11,319.03 +0.74 Foreign Currency Direct commented on the findings, “Recent exchange rate fluctuations have had a considerable impact on the cost of buying a property and living overseas. Despite the Euro maximising exchange rates across Europe, the cost of living still varies considerably across the region, meaning that exchange rate fluctuations have a magnified impact in more expensive regions. When considering a move abroad it is important to consider not only current exchange rates, but also any likely future currency changes and the cost of living in your preferred country. “In the last year Foreign Currency Direct has seen a 29.3% increase in the number of our clients transferring funds to and from Canada and New Zealand, suggesting that Brits are taking advantage of the increasing affordability of these destinations. Inversely, many British expats are moving their money and their homes back to the UK from Europe as they can no longer afford to live in Europe and can currently take advantage of the strength of the euro when converting their money back to pounds.” Percentage increase in costs (%) 19.00 16.00
May June 2009
September October 2009