The price of a property abroad will come down to many factors; its size, location and the view from the terrace, for example. Then there is the direction of interest rates, the US election and how Brexit trade talks go. Yes, all these with have a powerful effect on the price you pay, because they will change the value of the pounds you change into euro and dollars rates. Check out the main factors to look out for in 2020.
Brexit will continue to dominate the value of your pounds abroad. It should all be considerably quieter, however, with trade negotiations continuing through the year. By the summer recess we should have an idea how talks are progressing, but it’s also entirely possible that we will know nothing – or nothing good, anyway – until this time next year.
Prime Minister Johnson
With all the Brexit shenanigans we haven’t really seen yet how Johnson will govern. What will we see for the North of England? How much extra spending will there be? All will be revealed in the first Budget, expected in February. Other political interest will come from the potential for a Scottish referendum and the future direction of the Labour Party after Jeremy Corbyn resigns.
This is an election year in the US. The election of President Trump in 2016 caused the dollar to fall, but if the choice is between Trump being re-elected in November or a far-left candidate like Bernie Sanders the direction of the dollar will be less certain.
European Union future
There have been some changes in EU personnel. Christine Lagarde took over as head of the European Central Bank and Ursula von der Leyen took over leading the Commission in November. How will the two of them steer the EU through Brexit? The UK is not the only country that will suffer from no deal on trade talks, with everyone from Spanish fishermen around the Falkland Isles to BMW and Prosecco sellers.
As interest rates rise, so, usually, does the value of the pound. The new governor of the Bank of England, Andrew Bailey, takes over on 16 March. It isn’t up to the governor to change rates, that’s a decision of the monetary policy committee, so we shouldn’t expect any rapid changes. Moreover, according to the BoE’s most recent assessment, the outlook is “exceptionally cloudy,” and economists are divided over which way rates will go. They could go up or down this year, or nowhere.
Although UK house prices have trebled in the past 20 years, the last year of two hasn’t been so good. The most recent data from the land registry shows that prices were falling for much of 2019. Amongst other effects, slow house growth has contributed to disappointing inflation and GDP figures which, in turn, discourage the Bank of England from raising interest rates. For property buyers overseas, being unable to sell their UK home or investment properties has been a significant problem.
The post-Brexit economy
Even with a deal there are likely to be repercussions from Brexit. We don’t know if these will be good or bad, but there may be dangers lurking for the City and other vital parts of our service-based economy. On the other hand, we could expect to receive positive news on US-UK trade.