Choosing the moment to make a property investment abroad can be a little like buying a computer - the price can always seem more advantageous tomorrow than it is today. This is especially true when the currencies are moving up and down at speeds not normal in the currency markets.
Currencies are not the only consideration
Although the pound has strengthened a lot against the dollar in the past 6 months and weakened almost as much against the Euro, especially in the past few months, investors need to be wary of allowing this to make their decisions for them. If properties in your chosen location are appreciating in value waiting too long can lose you any benefit you may get from a currency movement. Similarly, having a balance in your portfolio between assets in sterling and in other currencies means you have a hedge against the vagaries of future currency fluctuations.
The key when considering where to invest is no different now than it was before the currency movements seen recently - don't ignore the income that will be generated in the foreign currency, include in your calculations the likely uplift in value of the asset and make sure your financing of the asset is, as far as possible, matched in terms of currency. By sticking to these rules the apparent hike in the initial cost of the asset in question is frequently more than offset by these other factors.
Seasoned investors know that by limiting the amount of actual exchange that has to be done (keeping the deposit as low as possible, raising finance in the relevant currency and ensuring the income is used to service loans rather than repatriated and therefore exchanged back into sterling) the real costs of declining currency rates can be kept to a minimum. For example, if you can buy an apartment in, say, Berlin for €150,000 using a mortgage in Euros of as much as possible (say €100,000) the worst case scenario if the Euro strengthens by 10% would be a price difference of a few thousand pounds. Such a cost could be easily covered by lower interest rates on the borrowings and capital appreciation in the asset's value.
Stick to the fundamentals
Shrewd investors will be looking closely at markets like Berlin (have a look at some of the properties available here) where property prices have already begun to rise (nearly 8% in the last quarter according to the German Office for National Statistics). Wait too long and the train will have well and truly left the station. And if the Euro strengthens even further as many commentators believe it will then markets in much of Europe will start to look seriously expensive as the pincer movement of currency depreciation and property inflation push the costs even higher.
Unless you're a currency expert or a clairvoyant with an infallible track record the way to make the decision is to examine the fundamentals for a long term investment not to worry too greatly about the short term ups and downs of sterling.
