Are You A British Investor Thinking Of Investing In Berlin’s Property Market?

Then, good news, because you now have an added incentive to do so: the cost of investing in Berlin property has fallen, as the pound to euro exchange rate has risen considerably in the past two years. To be specific, sterling today touched 1.37 versus the common currency, +17 cents higher than at the start of 2014.

What this means is that, when you transfer money from the UK to Germany, you’ll receive a significantly higher euro total compared to two years ago, making your investments in Berlin property more cost-effective. For example, were you to purchase a €500,000 apartment in a fashionable district of Berlin, you’d now receive a full +€75,000 more than 21 months ago, back in January 2014.

Hence, it goes without saying that it’s now a much more favourable time to invest in Berlin property than two years ago. The high exchange rate means you’ll need to save less in sterling to reach your target in euros, meaning you’ll be able to invest in Berlin property that perhaps would have previously been unaffordable, and do so more quickly. In brief, the strong pound cuts your financial burden.

As to why the pound to euro exchange rate has strengthened in the past two years, well, it’s because of the UK’s superior economic performance compared to the Eurozone. For instance, in August UK unemployment fell to its lowest level since the 2008 financial crisis, at +5.4%. In addition, the Bank of England is being widely tipped to lift UK interest rates in early 2016. So that’s lifted sterling.

Moreover, there’s an excellent chance that the pound will further capitalise on these gains, and rise further versus the common currency. This is because, for one, the European Central Bank signalled today that it’s ready to extend its emergency monetary stimulus scheme, signalling that the Eurozone is in danger of both deflation and economic stagnation. And that may weigh on the euro.

With this in mind, it’s the ideal time to invest in Berlin’s property market, as the favourable exchange rate has significantly cut the cost of doing so.

By Peter Lavelle

Pure FX