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Supersize returns on the Great British pound: FX shows strongest sterling rate against US dollar for 5.5 years

June 11, 2014Article by Ray Withers

The latest foreign exchange figures show sterling is currently strongest against the US dollar for 5.5 years. This further strengthens the trend for British investors putting their capital into American investments, as these rates mean more for your money.

The latest FX report states: “Generally we see the Pound as currently strong, with opportunities to buy most currencies at better rates than we would have expected a few weeks ago.”

US dollar a “safe haven” from Eurozone

US investment trends have been growing over the past few years as the US dollar is generally perceived as a “safe haven” from troubles in the Eurozone. The US is starting a robust return to form after recession, outpacing global recovery.

This is particularly notable in the US property market. Average US household wealth is up, values are up, banks are willing to lend: and the US market is shaking off the lows of the 2007/08 financial crisis and moving in a positive direction again.

IMF predicts world-leading c. 3 per growth for next two years

The International Monetary Fund (IMF), in its World Economic Outlook, forecasts a healthy 2.8 per cent growth for 2014, growing to 3 per cent for 2015. This is the highest rate amongst the world’s advanced economies.

The CoreLogic Home Price Index shows the average US property value rose 12.2 per cent in February 2014 (year-on-year). Figures from the Mortgage Bankers Association also show home-purchase mortgage applications up 13 per cent in March 2014.

Anand Nallathambi, President and CEO of CoreLogic, comments: “February marks two straight years of year-on-year gains in national prices across the United States.”

Investors bullish for US property

In addition to its fast-paced sales market, the US rental sector is also booming. According to specialist real estate research firm, Reis Inc., the US apartment vacancy rate fell by 4 per cent in Q1 2014.

This ideal combination of conditions is making investors increasingly bullish about US property and the market is opening up new opportunities to cater for demand.

Strong east coast growth continues up to ‘AAA’ Carolina

The States of North and South Carolina are an emerging hotspot along the east coast property boom. Led by Florida, the market continued its high-growth trend up through Georgia and, now, into the Carolinas.

According to the latest Standard & Poor’s Case-Schiller index, home prices in the popular Charlotte area of North Carolina, saw a huge gain of 8.8 per cent in the year to October 2013. This is the largest annual gain in 26 years, showing signs that this regional market is attracting attention.

Fitch Ratings confirmed this confidence by assigning the coveted ‘AAA’ rating to the city in March 2014. The ‘AAA’ rating is the highest possible assigned and shows the city “has an exceptional degree of creditworthiness and can easily meet its financial commitments.”  The city’s property tax revenue was said to be a key driver for the rating.

South Carolina is also on the up, with average home values rising 2.8 per cent over the past year, with a further 1.5 per cent rise forecast within the next year (according to Zillow).

Get peachy returns from South Carolina property

Ray Withers, CEO of Property Frontiers, explains: “We’ve had our eyes on the Carolinas for a while now. In particular we’ve been looking at the city of Gaffney, which found fame as the home town of lead ‘House of Cards’ character Frank Underwood, played by Kevin Spacey.”

He continues: “Anyway, I digress. Known as ‘the Peach Capital of South Carolina’, Gaffney is hugely popular with two of the main tenant brackets – students and young professionals. Hosting Limestone College and with a booming local economy, Gaffney is one of the most desirable cities in the Carolinas right now. According to the latest data from Zillow, Gaffney home values have increased by 5.7 per cent from February to February this past year. Tenant demand is huge too, with many students on waiting lists for good quality accommodation.”

He concludes: “It is definitely a market worth tapping into right now and we will soon be releasing a new product which offers you the best of all worlds – watch this space!”

Get in touch on +44 1865 202 700 to find out more about our hotspot US investments and to keep up to date with US investment news as it is released.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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