For more than half a century the US Dollar has been the global currency that oil, gold and just about every commodity is priced in. Prior to the financial crises, in 2007 and early-2008, Brits were enjoying around $2 to £1, which was great for shopping trips to New York or taking the family on holiday to Florida. However, few predicted how weak Sterling would be compared to the Dollar just eight years later, (trading at less than $1.24 at the time of writing). If we had known we would have bought a lot more property ‘across the pond’!
After crashing from over $2.00 to around $1.40 in the second half of 2008, the pound hovered around $1.60 for almost five years before descending in mid-2014 on a steady slide into the $1.20s. For this reason, a three-year timeframe seems appropriate to compare how Sterling has performed against other currencies around the world during that time.
Well, compared to the 50 largest, and most transparent, global economies, Sterling was actually the 9th worst performing currency between the start of 2014 and the end of 2016. This does not bode well for overseas property investment but it does increase the demand from foreign investors that want to buy property in the UK.
Property markets priced in pounds
In this article I have analysed historical data from Knight Frank’s Global House Price Index for the past three years to calculate how much property prices have increased in the 50 largest countries during that time, using the most recent data available (Q3 2013 – Q3 2016).
The average property price rise for the entire Index was 14% during the three year period and the good news is that UK property was the 12th best performing market globally, rising by 20.8%.