Overseas property buyers playing it safe
People in the UK who are looking to purchase real estate in a eurozone nation are becoming more and more risk-averse, experts have noted.
According to foreign exchange specialist HiFX, the majority of buyers are seeking to fix the cost of their euros straight away, rather than buy currency later on when it has to be transferred to the agent.
Mark Bodega, director of HiFX, told the Guardian investors are taking this approach because of continuing "uncertainty in the financial markets".
"Most of our clients play it safe and we've seen a 65 per cent increase in the number of buyers hedging their currency purchase through the use of one or more forward contracts," he commented.
Mr Bodega noted that the volume of euro sales at HiFX has gone up by 155 per cent in the last year, despite the slump in the currency's value.
"Normally when sterling strengthens against the euro – as it has done over the last few months – we'd expect to see a raft of euro buyers," he observed.
However, he said "everything is counterintuitive" at the moment, which means most of the recent transactions have been driven largely by fear.
This comes after HiFX stated that political leaders in the European Union appear to have caught up with the market rather than allow speculators to dictate events.
Chris Towner, director of FX advisory services at the organisation, said the only way they can put themselves at the forefront is to move towards further integration.
He noted that the German Bundesbank has been particularly opposed to the idea of the European Central Bank (ECB) taking action to reduce the cost of borrowing in Spain, Italy and other heavily indebted nations.
However, Mr Towner said Chancellor Angela Merkel appears to be supporting ECB president Mario Draghi's position, opting to pursue a common sense approach rather than allow the economic risk to persist.