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A Sterling Performance Since Brexit, So Which Countries Now Look Cheap?

Peter Hemple looks at how global property markets and currencies have performed since 2016

It is not entirely beyond the realms of possibility that by next summer we will be able to jump on a plane and go and sit on a sundrenched beach without any of the current hassles like PCR tests, vaccine passports, potential quarantine, sweaty masks or even long lines at the airport – you know, like we used to back in 10, 20 and 30 BC (Before Covid). Almost every month a new health expert is predicting that this virus will turn into another common cold in the near future and we can all return to the way we used to live.

If that does happen, the good news is that your hard-earned British pounds will now go a lot further overseas. Whether you are buying properties or Pina coladas, sterling is now worth more in almost every other currency than it was five years ago. In fact, from the 30 countries that I have analysed, looking at how their property markets and currencies performed between the end of June 2016 and the end of June 2021, the only currency that did not fall in value against sterling was the Czech koruna, which is worth exactly the same vs. the pound as it was five years ago.

In this article we will look at what the forecast is for sterling going forward but before we do that it is worth ‘zooming out’ a little and seeing how property markets around the world have performed compared to UK property, with the FX change factored in. Obviously, if you ever get your hands on a time machine that can take you back to the week after the EU referendum then do yourself a favour and just put your life savings into Bitcoin…you will be almost 100 times richer today.

To calculate the property price changes, I have used previous editions of the Q2 Global House Price Index (GHPI) from Knight Frank, (the most recent Q2 2021 report was released at the end of September), compounding the annual returns for each country over the past five years. This change in national property price was then multiplied by the change in the value of that country’s currency versus sterling, to give a true reflection of where is much cheaper for UK landlords to buy today and where is a lot more expensive. From the 30 countries selected, 20 are in Europe and 10 are popular property investment markets around the world.

In honour of the UK government’s recent obsession with listing countries using a traffic light system, the 30 countries below have been split into a red list (where property prices have increased far more than UK property), an amber list (where prices have increased at a similar rate to UK property) and a green list (where prices have underperformed compared to UK property).

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