The value of the pound in relation to the euro has fallen by around 16% in a year, and there are fears that the discrepancy between the two currencies could become even more acute.  The strong euro is now affecting property buyers in France and elsewhere throughout the eurozone.

Buyers are finding it harder to raise mortgages, they are finding they have to put an even bigger deposit down to secure a property and what’s more, they are finding that, even though house prices in France are not rising rapidly, they are paying more for their French property thanks to the weak pound.

The falling pound situation began last year when currency investors began to feel nervous about the knock on effects in the UK of the adverse credit situation in America.  The nervousness turned to panic after the near collapse of Northern Rock, and ever since then there has been talk of falling British house prices and lower consumer spending and this has impacted the value of the sterling currency considerably.

The pound has fallen to almost record lows against the euro and many analysts believe it could fall further in coming months.  What all this means to the likes of you and me is that it now costs more to buy anything in euros than it did a year ago – 16% more at the time of writing.  If you are planning a holiday in the eurozone this year, expect to be worse off, and if you’re planning on buying property in France plan to be severely impacted.

According to currency exchange specialists there are ways you can offset the impact – for example you can enter into a forward transaction and effectively secure the rate at which you will be exchanging your pounds for euros today but not make the exchange until a future date.  Alternatively, if you’re buying off plan you can buy some of your euros today, some in a few months time, some perhaps a year down the line when the rate of exchange may be more favourable.

The thinking is that because the IMF believes the UK’s economy will grown and expand faster than that across the eurozone, the pound will once again grow in strength versus the dollar…so if you can hold off having to transfer all your money today and in the coming few months, so much the better – potentially!  But who’s to say where the future will take us!

If you are one of the property buyers in France and have your heart set on a place there, just take into account the strong euro when you make your offer, offer below the asking price if you think you can get away with it and hopefully, you can still bag yourself a bargain French home because it is a buyer’s market and those of us who are bold in our bartering and haggling will do well over the longer term!