Todays (7th February 2008) drop in UK interest rates of a quarter % to 5.25% will ultimately impact prices of Overseas Properties.
Clearly the Bank of England's rate-setting committee decided that the UK is not close to a recession - otherwise they would have gone for maybe a half %. But neither is the UK economy in serious danger of inflation - which would have meant no change. Instead they picked a middle ground modest downward tweak of 0.25%.
Impact on Overseas Property sales and prices
So, at OPC we ask ourselves what impact the UK interest rates can have on the sales and prices of properties abroad? The answer has to be, in the short term - just a little. The actual increased liquidity of the UK housing market and spare cash will be a very small effect. Banks are not cutting the costs of mortgages and many people are on fixed terms and rates. Confidence won't be impacted by such modest measures. And so people in the UK will continue to be a little bear-ish about their finances and resist any dreamy notions of living in sun-drenched paradises, sipping pina coladas, etc.
Serious buyers will be more active
However, those who are serious about buying abroad for investment, for income streams and as holiday-cum-retirement homes will take heart. The UK pound will probably continue to drift lower versus the USD and EUR - making a purchase now a good thing. Buying into income (rental) streams fixed in USD or EUR under those circumstances makes great sense. And the state of he UK economy has little effect on rental rates outside of a few Brit holiday hotspots.
So, all-in-all. Good news for bargain-hunters and serious buyers!