Mallorca Property for UK Purchasers – "Sterling will be strongest major currency in 2011″

Mallorca Property for UK Purchasers "Sterling will be strongest major currency in 2011

According to an article inthe Telegraph on the 10th December Sterling will be the best-perfoming major currency next year. Specifically the article read:

The prediction came as Barcap, the securities arm of the retail bank, also used its 2011 outlook to predict that stock markets will outperform government bonds and that the US economy will stage a stronger recovery than it has managed in 2010.

The pound, which has been hard hit since the financial crisis, will end next year at $1.82 against the dollar and 78p versus the euro, it was estimated. The currency closed on Thursday in London at $1.5728 and 84p.

The UK currency's performance will be matched by a strong showing for the FTSE 100, according to Barcap, which expects the index to rise by about 18pc next year and offer a further 4pc return in dividends. The bank's hopes for the London market come from performance in the rest of the world, rather than the UK.

"The FTSE is a major play on global demand," said Edmund Shing, head of European equity strategy at Barcap in London. "You don't have to look very far to find exposure, whether directly through miners and food producers, or indirectly through the oil companies."

He pointed to miners including Rio Tinto and Xstrata, food producers such Unilever and oil companies such as Royal Dutch Shell. The FTSE closed on Thursday up 0.2pc at 5,807.96.

David Cameron's coalition Government has pledged tax increases and spending cuts in an effort to eliminate a structural deficit estimated at 109bn. If the Governmnent can begin to deliver on the promise then it should help both the currency and stock markets, Barcap predicts.

"The Coalition is enacting deep structural reform in order to take a lump out of the deficit, which is a risk," said Mr Shing. " It could ultimately be good for the structural growth story in the UK."

The RBS bank has for some time maintained it's forecast for the end of 2011 at just over 1.30 per Pound Sterling a very interesting fact for UK overseas property purchasers that could just find that 2011 is a good time to look at and invest in Mallorca property.

With the increasing number of Mallorca properties seeing their asking prices reduced (although caution is still needed to identify the really good priced properties from the "rest") and a strengthening pound I think we could see a 20-30%* swing in favour of UK buyers in what will be a 12 month period.

Note: *ie the real cost to UK buyers could be 20-30% less between mid 2010 and mid end 2011 where asking prices are adjusted accordingly and Sterling continues to strengthen. That is not the same as saying buyers this year have bought high as long as they have negotiated hard and identified the real buying opportunities.

In practice one of my recommendations is to consider a delayed purchase (exchange when appropriate but complete in the Autumn for example). The real key remains the actual property price, looking carefully, to identify real buying opportunities. Then and only then can you consider a parallel "exchange rate strategy". Sterling may help if the outcome suggested by the banks turns into reality but the real challenge is to identify the good buying opportunities. They are out there but not that easy to find always.

For good buying opportunities see:

Good value Mallorca property for salehttp://mallorcapropertymarket.wordpress.com/2010/12/09/property-for-sale-in-mallorca-best-buy-mallorca-property/

See alsoNovi Property Mallorca andProperties International Mallorca

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