Skip to main content
  • Register
  • Help
  • Contact us
  • Log out of your HL account

Spotted your dream property abroad? How the right plan could save you thousands

Find out how exchange rates affect the cost of buying a property abroad. Plus how you can shelter against falling rates or capture improvements.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

You’re back from your summer holiday. The suntan is fading, but the memories of that quaint countryside villa or smart seafront apartment aren’t. You’ve now got a burning desire to get a place abroad. It’s a dream for many people.

But unless you have a plan, what seemed like a great idea during a week by the pool can land you in deep water.

That’s because there’s a big unknown when buying property abroad: the exchange rate you’ll receive. And with the purchase process taking weeks or even months, rates have plenty of time to move. This could put your dream property out of reach of your budget by the time you come to complete.

Property price changes abroad.

Country Cost in 2010 Cost in Q3 2018 Difference
France €200,000 €217,600 +8.8%
Spain €200,000 €179,000 -10.5%
Portugal €200,000 €241,600 +20.8%
USA US$200,000 US$298,000 +49%
Australia A$200,000 A$277,600 +38.8%

Figures are based on applying residential property inflation figures to a property costing 200,000 in local currency in 2010. Source for inflation data: BIS statistical bulletin 2019.

From the table above, it looks like Spanish property has had a tough run, while the US is up 49%. But this ignores the impact of currency markets on the cost of the property. There have been plenty of swings in exchange rates since 2010.

To see the real change in value for a UK buyer, you need to factor in currency movements.

Property price changes with currency movements

Country Cost in 2010 Cost in Q3 2018 Difference
France £171,468 £194,164 13.24%
Spain £171,468 £159,722 -6.85%
Portugal £171,468 £215,580 25.73%
USA £129,366 £228,598 76.71%
Australia £118,850 £155,745 31.04%

Source: Bank of England exchange rates (average yearly and quarterly) accessed on 30/08/2019 and author’s calculations

Truth is, property in the US rose by 76% in sterling terms as a result of the US dollar gaining against the pound. On the other hand, the real cost of Australian property only went up by 31%.

These examples are over the course of nearly eight years, so you’d expect some change. But short term changes can have an effect too. After details emerged of Boris Johnson’s plan to suspend parliament last week, sterling fell against the euro by almost 1% in just an hour, before making up some ground by the end of the same day.

Although we don’t see swings like this all the time, it does show just how sensitive the pound is to Brexit developments. Given the amount needed to buy property abroad, even a small change could cost you thousands.

Whether you welcome or worry about currency fluctuations, our currency service can help.

See our Guide to Buying Property Abroad

Fix your costs today

If you can afford your property now, but worry about future exchange rates, you could fix your costs today. The concept of a forward contract is simple: you fix an exchange rate for up to two years ahead. So no matter what happens between now and when you need to pay for your property, you’ll know exactly what it’ll cost.

The purpose of a forward contract is really to give you peace of mind, regardless of what happens in the currency markets. As you’ve fixed the rate, you’ll benefit if the exchange rate gets worse, but you won’t benefit if it gets better.

Capture improving rates

If you’re waiting for exchange rates to improve and want to capture them if they do, a rate alert or market order could help.

With a rate alert, you specify a rate that you’re looking to achieve. We’ll track the markets for you and contact you if your rate becomes available. This will save you time and effort watching the markets yourself, and there’s no obligation to trade. We’ll contact you during our opening hours of Monday – Friday, 8am-6pm. If your rate is hit outside of these hours, we’ll contact you as soon as possible the following business day.

A market order could provide more certainty. It goes one step further and automatically buys your currency if the rate you want becomes available, even if it happens in the middle of the night. We’ll be in touch as soon as possible to arrange payment and to send your currency to where you’d like it to go.

Rate alerts and market orders are useful and can save you money if markets move in the way you expect. But they don’t offer any shelter if exchange rates move the other way.

I’m in the early stages of buying abroad, why should I worry about this now?

Too many people leave their currency transfer until the eleventh hour. This leaves them at the mercy of the exchange rate at the time they come to do their transfer. Planning earlier gives you more flexibility.

It doesn’t cost anything to open and hold a currency account. But the earlier you start, the easier it’ll be to get everything in order. You’ll also have access to one of our dedicated currency specialists, here to help every step of the way.

Discover more

This article and our guides are not personal advice or a recommendation to trade any of the currencies mentioned. If you are unsure of the suitability of currency for your circumstances seek advice.

The Hargreaves Lansdown Currency Service is a trading name of Hargreaves Lansdown Asset Management Limited, which is a wholly owned subsidiary of Hargreaves Lansdown Plc, One College Square South, Anchor Road, Bristol, BS1 5HL. Company Registered in England & Wales No. 1896481. It is authorised by the Financial Conduct Authority (FCA) as a Payment Institution under the Payment Services Regulations 2017. The Firm Reference number is 115248.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Daily market update emails

  • FTSE 100 riser and faller updates
  • Breaking market news, plus the latest share research, tips and broker comments

Related articles

Category: Investing and saving

How the HL Currency Service ''took the stress away''

HL client, Linda Glover, shares her experience using the HL Currency Service.

15 Aug 2018 3 min read

Category: Investing and saving

The outlook for sterling in 2018

We reflect on a year in the currency markets, and consider the outlook for 2018.

Chris Saint

28 Dec 2017 1 min read

Category: Investing and saving

3 tips to save on currency transfers

Make sure you’re getting the most from your money.

Ryan Kenny

15 May 2019 3 min read

Category: Investing and saving

Three things that could affect sterling this year

We consider the potential impact three events might have on the pound.

Chris Saint

26 Jan 2018 2 min read