Sterling sell off abated as Pound Strengthens against Euro

Sterling Sell off abated as Pound Strengthens against Euro

Sterling vs. Euro;

This week’s report will focus on the erratic swings in GBP/EUR rates, the news and data that caused the fluctuations, and potential moves in the coming weeks.  The story dominating FX headlines recently has been sterling’s rapid decline.  The pound has been subject to an aggressive sell-off as fears mounted that the UK may enter a triple-dip recession, which could result in the loss of our Triple-A credit rating; and the now looming prospect of an in/out referendum on Europe for 2015, has created greater uncertainty.  Last week, however, we saw the first significant retracement of this pressure and, once again, ECB President Mario Draghi was at the centre of the move.

The single currency began last week on the back foot as news broke of corruption and scandal in the Southern European States.  Spain and Italy were both back in the headlines with surprising allegations of undeclared payments from a secret slush fund being received by Spain’s ruling conservative party. 

This news was coupled with the announcement that Banca Monte dei Paschi di Siena, the World’s oldest surviving bank, was involved in a derivatives scandal . 

So why has this affected euro rates?  Essentially this calls on the old cliché “Markets hate uncertainty”. 

Though this caused a rise in GBP/EUR rates the largest swing in prices can be credited to the words of Mark Carney and Mario Draghi.  The incoming Governor of the Bank of England sat before the Treasury select committee on Thursday, and in his testimony to MP’s, he outlined his thoughts and intentions for the UK economy moving forward.  Mervyn King has suggested before that Quantitative easing has a diminishing rate of return, with regard to effectiveness, though Carney outlined that the BoE could expand the range of assets it purchases, whilst supporting the pound from further weakening, all without effecting the UK’s inflation target.  Sterling began strengthening both before and during Mr Carney’s words.

Mario Draghi once again serenaded the currency markets with his announcement last Thursday; speaking on the euros current bull-run.  He discussed the significance of the rate, with regard to growth and price stability, highlighting the dangers of a continual strengthening.  His comments on inflation hinted that a cut to interest rates may not be entirely off the table; the last time such a measure was taken, we saw GBP/EUR rates surge to four year highs.  His words came as a surprise to many, most expected him to touch upon the euros recent appreciation, though the announcement appeared more of a concerted effort to talk the single currency down.

Much of the recent coverage of GBP/EUR rates appears to show the UK, seemingly, in perpetual decline and the euro storming the markets.  Yet the most recent NIESR GDP estimate for the UK came in at 0.0%; better than expected, however, sterling/euro is at a pivotal point.  The UK certainly is not out of the woods, despite the recent flurry of positive data, the last official GDP figures have been below forecast.  If this were to happen again the false hope could be doubly damaging for the pound.  Not only this, but the euros recent appreciation has largely been built on rhetoric rather than any concrete data.  Although Greece’s Finance Minister has suggested that they could begin the road to recovery by the end of the year, this remains to be seen, and if there was a cut to interest rates to stimulate the European economies, or more negative press, we could see the euro weaken again. 

Sterling vs. US Dollar;

It was another choppy week for cable and the swings we saw in exchange rates last week could well continue. Since the start 2013 sterling has been in free fall against the US Dollar, and the current trend shows no signs of improvement.

Positive UK retail sales data released on Tuesday did see a brief spike in rates; figures showed that sales increased for January by 1.9% compared to January 2012 which is the largest year on year rise since December 2011. The news saw the GBP/USD cross jump to a high of $1.5792 but sterling could not hold its value over the course of the day and rates quickly started to fall. By midweek the pound actually fell by 1% against the dollar to reach a low of $1.5634.

Over in the states talk of spending cuts and tax increases have resurfaced. The temporary fiscal cliff avoidance package put together by President Obama on New Year’s day is due to expire on the 1st March, leading the President  to approach congress to put another short term package together to avoid larger cuts next month. The proposal was quickly rejected and the longer it drags on the more likely we are to see the dollar come under pressure. Indeed last week’s poor US Q4 GDP figure was largely put down to fiscal cliff  pressures and if a permanent solution cannot be put in place, there is chance rates could start to push higher.

Thursday was a potentially positive day for the UK last week with the Bank of England holding their monthly meeting. However the expected hold on interest rates and no further QE only gave the pound a brief boost. Even when combined with the zero growth (but no decline) estimate of Januarys’ GDP the pound could not buck the general trend of decline against the Dollar. The UK economy seems to be the centre of attention and in the absence of growth the pound simply cannot keep pace with the Dollar at the moment.

With so much volatility surrounding the currency markets the use of Stop Loss and Limit Orders has increased in popularity; they can protect you against a falling market but also help target a rate that might not be currently available. For more information you can read our finance pages here or contact us at info@goldacreestates.com : http://goldacreestates.com/Finance 

 

Eurozone Gaining Confidence

Eurozone Gaining Confidence as Spanish Banks Ease Dependancy

Is there confusion again over Spain's banks? If so its not really new.   On one hand, the Bank of Spain said in mid-January that non-performing loans were on the increase and that more than one in nine would probably not be repaid.  On the other, the central bank said at the same time that Spanish banks were less dependent on emergency funding from the European Central Bank.  In December they borrowed €357bn, appreciably less than the €411bn they took last August. Prime Minister Mariano Rajoy is relaxed.  He is "absolutely convinced that Spanish financial institutions will not require any more funds than they were given already" because they have been subject to a "complete striptease" laying bare their financial circumstances.

The prime minister's optimism is shared, though perhaps with more caution, by investors. Since the beginning of the year they have been buying bank shares, lifting the value of Bankinter by a third and Banco Popular Espanol by a quarter. Investors are also much readier to hold Spanish bonds. Six months ago they were demanding a return of over 7% on their five-year loans to the government. Today they are content with less than 4%.

The change is symptomatic of a warmer attitude among investors towards the euro. A month ago it looked as if 2013 would turn out to be a better year for the single currency and halfway through January that is proving to be true.

Since the turn of the year the euro has strengthened by about five and a half  cents against the pound and by about four  cents against the US dollar. It has done so mostly as a result of improved sentiment.  Strange to think it was about twelve months ago when  most of the world were questioning the very survival of the single currency  with a full complement of member states. Today it feels reasonable to expect that singleness to continue, as a result of the determination of EU leaders and central bankers to do "whatever it takes" to save the euro.

Okay  so what else is happening?  

Interestingly instead, it is the pound that must face the tough questions. Even though the UK economy appears to be in better shape than Euroland, investors are not satisfied. They fear a third dip into recession. They fear the downgrade of Britain's AAA credit rating that might follow that dip. They fear the anti-Europe rhetoric in Westminster and the media. And because of those fears their appetite for sterling has faded.  Add to this the fear of further job losses in the Financial Services sector and the high street disappearing unemployment may still have  a further negative impact upon the  UK's timetable for recovery

So half the euro's performance against sterling this year is down to improved demand for the single currency; the other half is the result of investors' disenchantment with the pound. Both attitudes could change. It would be unusual if there were not some new panic in Euroland before too many months have gone by. The UK economy might pick up speed once the cold weather has passed and people are allowed to go back to work and school.

Stateside the new holiday destination of " The Fiscal Cliff" seems to have disappeared and the republicans have provided Mr Obama a little bit longer to sort out the economy and the debt ceiling which is standing around $17trillion.  Not sure how many zeros a in a trillion but its a lot. What the bet it could hit £20 trillion.  In fairness however housing, manufacturing and employment opportunities are all moving in the right way for the citizens of the USA.

The big decision if you are transferring money is timing so if you want to make more of your money and take expert guidance talk to our preferred  currency specialists. If you want to guard against rate fluctuations and get the best deal for your Sterling contact us and read our financial pages here: http://goldacreestates.com/Finance .

Advice on Selling Your Property

Here are a few tips to Help Sell Your Property in Fuerteventura

Preparing your property for sale

■Ensure your property inside and out is clean and tidy

■Ensure any minor repairs have been carried out prior to putting your property on the market

■If redecorating try and use light and neutral colours, this will make rooms appear larger

■Remove and put in to storage any unnecessary “clutter”

■Keep kitchen surfaces clear and make sure your oven is spotless!

■If you have a dog ensure it is kept under control and preferably out of sight. Many people will not share your confidence with dogs

■If you are using an agent leave the selling to the agent

■Prospective buyers will appreciate if you provide them with an estimate of your annual running costs

Taxes and Expenses

■For a detailed guide to selling taxes and expenses please consult the Selling section of “Advice for Buyers”

■Capital Gains Tax if you have made a profit after expenses Currently 18%

■Plus Valia – Municipal Tax on increase in land value

 ■Legal Fees

■Agency Fees

For more information on Selling Your Property consult our pages here:
http://goldacreestates.com/Sell

Global Housing Market Figures Released



Latest Statistics on Global Housing Markets

Latest figures from the Global Property Guide suggest Europe is still experiencing the brunt of the downward pressure comparing figures from the 3^rd Quarter 2011 to Q3 2012 in terms of property prices and sales numbers.

On a positive note the U.S. housing market continues to recover with the Federal Housing Finance Agency (FHFA) seasonally-adjusted purchase-only house price index rose by 2.31% year-on-year in Q3 2012, the highest growth seen since Q2 2006. The nationwide seasonally-adjusted S&P/Case-Shiller home price index also rose by 1.92% during the year to Q3 2012, in sharp contrast with its 7% year-on-year decline seen in Q3 2011.

Also Dubai in the U.A.E. has shown positive trends with the price index for all residential properties surged by 14.43% during the year to end-Q3 2012, as compared to a meagre year-on-year increase of 0.96% seen in the same period last year.

The Pacific markets also show signs of recovery with New Zealand 's median house price rose by 5.19% during the year to end-Q3 2012, in sharp contrast with the 4.39% year-on-year decline in Q3 2011. Likewise, Australia 's housing market is also improving, with house prices in its eight major cities falling by just 1.57% year-on-year in Q3 2012, the lowest decline since Q4 2010.

Some European markets are experiencing turnarounds with house price falls in Ireland decelerating. Ireland 's residential property price index fell by 13.17% year-on-year in Q3 2012, the lowest decline since Q1 2011. In addition, house prices have risen significantly in Austria, Turkey, Latvia, Germany, Iceland and Finland.

On the other hand many European housing markets remain extremely depressed, and continue their rapid spiral downwards. House price falls are accelerating in Greece, Spain, Netherlands, Portugal, Croatia and Lithuania. Of the 23 European countries included in the survey, 14 countries recorded house price falls while only 9 countries have seen house price increases. The nine weakest housing markets in our global survey are all in Europe.

Also the Asian housing market surge has weakened. Seven of the 10 Asian housing markets included in our survey performed more poorly this year than the previous year. But Asia 's biggest housing market, China, is recovering, judging by the latest quarter 's figures.

In inflation-adjusted terms, 23 housing markets have shown better year-on-year figures in Q3 2012 than in the same period last year, while 20 housing markets have shown poorer performance. However the nominal figures are slightly more disappointing—25 housing markets performed more poorly while only 19 performed better.

In Conclusion of the 44 countries for which quarterly house price figures are available, house prices fell in 23 countries, and rose in 21 countries during the year ending in the third quarter of 2012, again in inflation-adjusted terms.

The Global Property Guide's statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents. Nominal figures can be misleading, as suggested by the fact that year-on-year in Q3, nominal house prices rose in more countries (27 countries) than fell (17 countries).



 

 

 

 

 

 

European housing markets generally weak

The scale of the European downturn, the sheer size of the downward pressure, continues to surprise. Of the 23 European countries included in the survey, 14 countries recorded house price falls while only 9 countries have seen house price increases. To make the picture more dismal, the nine weakest housing markets in our global survey are all in Europe.

Ireland remains the world 's weakest housing market in Q3 2012. However, house price falls now appear to be decelerating in Ireland. House prices dropped 13.17% during the year to Q3 2012, the smallest decline since Q1 2011. House prices dropped by just 0.03% in Q3.

Not so far behind was Greece, with house prices plunging by 12.47% during the year to Q3 2012, the steepest year-on-year decline since 1998. House prices dropped 1.03% during the latest quarter. Greece is already on its fifth year of recession with real GDP expected to contract by 6% this year.

House prices have declined in Spain. House prices plunged by 11.87% during the year to Q3 2012, the biggest decline since Q4 1992. House prices dropped 2.78% during the latest quarter. The Spanish economy is expected to contract by 1.3% this year and by another 1.4% in 2013. The country 's deficit is projected to remain high, at 8.1% of GDP by end-2012. Overall unemployment is at a record high, at 25%.

The Netherlands comes fourth on the list of the world 's worst performers. House prices fell 11.43% year-on-year in Q3 2012, the sharpest decline since Q1 2009. On a quarterly basis, house prices fell 3.37% during Q3.

Romania 's housing market remains depressed. The average selling price of apartments plunged 12.76% year-on-year and fell 4.61% during the latest quarter. Romania 's economic growth is expected to be flat this year with real GDP actually declining 0.5% in Q3 2012 from the previous quarter. The economy fell into recession in Q1 2012 before seeing a minimal growth in Q2.

Many other European countries continue to suffer. These include Portugal, with house prices falling by 9.7% during the year to Q3 2012, Zagreb, Croatia (-8.03%), Warsaw, Poland (-7.64%), Bulgaria (-6.84%), Ukraine (-4.41%), Vilnius, Lithuania (-4.36%), Slovakia (-4.13%), Russia (-3.98%), UK (-3.97%), and Sweden (-3.17%). All of these, except Slovakia and Sweden, recorded house price falls during the latest quarter.

Some strong European housing markets relieve the gloom. Austria 's housing market remains ebullient, with the residential property price index rising by 7.53% during the year to Q3 2012, after rising by 11.26% year-on-year in Q2 and 8.24% in Q1 2012. House prices rose by 0.50% during the latest quarter. Vienna 's residential property price index rose a dramatic 13.10% during the year to Q3 2012.

Norway 's house price index rose by 6.55% during the year to Q3 2012, and by 1.27% during the latest quarter.

The upsurge in these two countries' housing markets was so strong as to propel them into fourth and fifth place in the worldwide league table.

Other European countries which saw moderate year-on-year house price increases to Q3 2012 included Turkey (4.96%), Riga, Latvia (3.38%), Switzerland (3.27%), Germany (3.16%), Estonia (2.62%), and Iceland (2.28%).

Finland 's housing market is also improving. The average price of apartments in old blocks of flats rose by 0.52% during the year to Q3, the first year-on-year growth after four consecutive quarters of house price falls.

 

 

 

New Tax News for Canary Islands & Spain

The latest conditions for cash payments above 2,500 euros were announced on the19th November 2012 for Companies, Individuals and Professionals in Canary Islands, Spain.

The provision which is included in the new anti-fraud law published in the Official newspapers on the 30th October specifies that the amount is the limit payable in cash, taking effect 20 days after publication in the BOE.

For the development of this measure the legislative experience of EU countries such as France and Italy were taken into consideration. The limit is applicable to individuals, companies and professionals but does not apply to payments made to banks. There is also a provision for individual non-residents limiting the amount to 15,000 euros so as not to damage linked tourism activities.

The participants in the operation should keep documentary evidence of payment for five years from the date of payment, to prove that it was made through one of the means of payment other than cash. They will be required to provide these documents at the request of the tax authority.

Those who violate this restriction will face fines of 25% of the value of the payment made in cash. Both the payer and the payee jointly and severally liable for such infringement, so that the tax may be brought against any of them to collect 100% of the penalty.

PENALTY EXEMPTION IF REPORTED

The taxpayer who was involved in one of these transactions will be exempted from punishment if they voluntarily reported the incident to the administration provided that three months have elapsed since the payment in cash. The Tax Office has set up a procedure for handling complaints telematics from tomorrow, referring exclusively to cash payments in excess of €2.500.

The Act also expressly provides a rule against splitting operations, the calculation of the limit of €2.500 legally established. In addition, the standard introduces reporting requirements for any authority or officer in the performance of his duties, becomes aware of any breach of the legal limit.

The Tax Office has clarified that if an operation exceeds cash paid €2.500 but you pay in several times splitting the payment of amounts below the legal limit, is also breaking the limitation is effective now. That is, if an operation of €4.000 is payable in cash in two installments of €2.000 each, the penalty would be 25% above €4.000 and thus €1.000 in total.

 

HIGH DENOMINATION NOTES

The use of bulk cash is directly related to transactions to evade taxes. Limiting cash reinforces the control that keeps the tax in the fight against fraud. This line includes the special plan on the use of high denomination notes (€200 and €500), started four years ago and which is continued by the Administration.

For more information on Property Finance please read our finance pages here: http://goldacreestates.com/Finance 

International Property Awards Present Industry Winners

EUROPE’S TOP PROPERTIES SCOOP PRESTIGIOUS INDUSTRY AWARDS

The best developments, architecture and interior design from across the length and breadth of Europe were celebrated at the London Marriott Hotel Grosvenor Square on Monday (September 24th). The leading property professionals behind these outstanding projects were invited to attend the European Property Awards in association with Yamaha and the Royal Institute of Chartered Surveyors (RICS).

GoldAcre Estates S.L won highly commended for the Best Website in Spain and their Managing Director John Goldacre said he was delighted at the companies achievement on winning an award for their new website www.goldacreestates.com  considering they had launched the new site only a month before entering, he stated he was proud of the whole teams efforts and how the company had performed in such prestigious awards..

These awards, combined with the other regional awards programmes for Arabia, Asia Pacific, Africa, the UK and the Americas, form the globally renowned International Property Awards. Now in their 19^th year, they are the world’s most prestigious property competition and cover residential as well as commercial categories.

Judging was carried out through a meticulous process involving a panel of over 60 experts covering every aspect of the property business. The next stage of the awards programme is for top scoring five-star winners of each category to be re-judged against those from the other regions to determine the ultimate World’s Best winners. These will be announced at the grand final to be held at the Grosvenor House Hotel, Park Lane, London on Friday, December 7^th.

President of the International Property Awards, Stuart Shield, says, “We had entries from 29 different European countries this year including Serbia, Georgia, Azerbaijan and Turkmenistan which all entered for the first time. The level of competition was extremely high and we now wait to see how many international accolades Europe can achieve when competing against the rest of the world.”

Property Sales on the Increase for Canary Islands

Statistics published last week show an increase of 15.6% of residential properties having sold across Spain for the second quarter of 2012 with over 80,000 homes being sold in total. From a June 2011 to June 2012 perspective more than 333,500 properties were sold.

Although there were some regions that recorded negative variations, the Canary Islands (including Fuerteventura) and Valencia showed growth fugures of 1.4% and 0.2% respectively.   The Canary Island figures are approximately 30% better than those for Madrid, Cantabria, Basque Country and Navarra - a huge difference within Spain showing how the Islands property market is distinctive from the mainland. Las Palmas that includes Gran Canaria, Fuerteventura and Lanzarote was also higher than the Canary Islands average at 4.7%.

 

New developments accounted for 29.3% of the total transactions, up from 25.4% last year while the second hand market although lost ground from the previous year did grow in sales by 9.4% compared to the first quarter of 2012.

 

Foreign buyers with a total of 9,502 transactions was up for the fourth consecutive quarter by 12.1% from 2nd quarter 2011.

 

To find out more about which properties are selling the most in Fuerteventura visit us at Goldacre Estates in teh Tamarindo Commercial Center Corralejo or call 0034-928535044 and visit http://goldacreestates.com for your widest choice of properties, bank reposessions and resales.