Sterlings climb improves the Spanish and Canary lslands Real Estate markets

Sterlings value affects the real estate markets in the Canary Islands and Spain, with a particular increase in the Fuerteventura property market has seen a significant increase in business from the UK that has increased in line with the improvements and gains that sterling has made recently.

Sterling on Wednesday morning saw a decline against the major currencies on Tuesday had nothing to do with the unemployment data and nothing to do with the monetary policy committee minutes: Neither came out until an hour and a half after it had set off south. Almost on the dot of eight cable began a slide that cost it two and a half cents in the following five hours. Sterling/euro cut just over a cent in slightly less time and sterling/Swiss performed proportionally badly. The move was provoked by a softer tone to equity markets, with all that implies for risk appetite. After a rally lasting more than a week investors knew a profit-taking signal when they saw one and they lobbed out their surplus pounds.

As far as the unemployment numbers went, they were acceptably bad. Jobless claims rose by less than expected as did the unemployment rate, which rose to 7.2%. The MPC minutes showed unanimous approval for a continuation of the asset purchase programme.

The US inflation data painted an interesting picture. Prices went up by just 0.1% in May and prices excluding food and energy did exactly the same. That symmetry was entirely absent from the annual figure. In the 12 month to May headline CPI fell by 1.3%. "Core" prices, excluding food and energy (commodities, in other words), were up by 1.8%. What happened last summer? Commodity prices fell out of bed, led by oil. Although prices did not bottom until December they are already back up to October's levels. In four months' time that commodity price deflation will have worked its way through the system and headline inflation will be heading back into line with core inflation. Put that together with the possibility of growth in the second half of the year and you see why investors are already speculating that we will see higher US interest rates by Christmas.

But that is all in the future. For the time being, those central banks that still have scope to do so are still lowering their policy interest rates. There have been rate cuts in Iceland, Brazil and Turkey this month and it is possible that South Africa might join them next week. Today's meeting of the Swiss National Bank is highly unlikely to result in a change to its 0-0.75% target range but be prepared for other developments. Back in March the SNB threatened to intervene if its currency became too strong. They did it too. Three months on they may decide that it is time for a reminder.

Report provided by moneycorp

CREDIT CRUNCH FORCES FIRST TIME BUYERS ABROAD

- Three quarters (74%) of first time buyers (FTBs) are shelving plans to buy property in the UK due to the current financial climate
- Nearly half (44%) of FTBs plan to buy abroad instead
- Spain and France are the top choices, followed closely by the USA and Australia

Three quarters of FTBs are abandoning their plans to buy property in the UK due to market instability, with nearly half putting their hopes in property abroad.

Moneycorp’s First Time Buyers Report, which examines the FTB market every two years*, also reveals that a third have been refused a mortgage in the last six months. This statistic backs recent figures released by the Council of Mortgage Lenders, highlighting that the number of mortgage loans to FTBs fell to 17,800 in March, down almost 50% from August last year.

As lending criteria tightens and 100% and 95% mortgages disappear from the market, UK first timers are turning to foreign shores to live their investment dream - where more than four in five think their money will go further.

Spain** continues to be the number one choice for FTBs setting their sights overseas, with France in second place. The USA has pushed into a top-five position, with cash savvy Brits looking to take advantage of the weak Dollar. Australia is in fourth place in 2008 – despite not making an appearance in the top five back in 2006 – and Italy is down from third place in 2006 to fifth place this year.

And it seems this increased interest in overseas markets isn’t just fuelling the Buying Abroad Renting in Britain (BARBies) trend. More than half (55%) of those planning to make a purchase overseas will treat the property as a home as opposed to an investment – up from a third (36%) in June 2006.

“The fact that so many buyers are prepared to get their first taste of home ownership in a foreign land speaks volumes for the state of today’s domestic market conditions,” said Moneycorp spokesperson, Marc Morley-Freer.

“Our research also shows that two in five (41%) FTBs aren’t aware that favourable exchange rates can save them a lot of money when transferring funds abroad – for deposits or mortgage payments. Companies like Moneycorp make it easier – and of course cheaper – to buy overseas, as we’re able to provide better exchange rates than a bank. With more currency, first time buyers have a greater choice when it comes to purchasing their property overseas. “

Notes to editors

The research was conducted by OnePoll on behalf of Moneycorp. OnePoll surveyed 500+ first time buyers in May 2008
* The last Moneycorp First Time Buyers Report was issued in June 2006
** Table 1: Findings from Moneycorp’s First Time Buyers report in 2006 and 2008
2008 top 5 most popular countries with FTBs
2006 top 5 most popular countries with FTBs
34% Spain
27% France
22% USA
12% Italy
18% Australia
6% Cyprus
17% Italy
5% Bulgaria


About Moneycorp

Moneycorp is a trading name of TTT Moneycorp Limited, which has been dealing in foreign exchange since 1979 and last year traded over £10 billion in currencies. The Company has been accredited to ISO 9000 Quality Assurance since 1996, a unique achievement in the foreign exchange industry.

Moneycorp’s Commercial Foreign Exchange Division is the UK's leading foreign exchange specialist and provides tailored services to help companies and individuals save money on their overseas currency transfers.

Clients benefit from a Personal Dealer who they can contact directly and who will provide regular updates on exchange rate movements. They also benefit from extended office hours 6 days a week and 24-hour exchange monitoring. A range of services is available, including spot and forward contracts.

The Royal Bank of Scotland (RBS) is a significant shareholder in the Group.