In July 2022, the dollar/euro exchange rate hit parity, something not seen for two decades. This has made a house for sale in Portugal around 15 per cent cheaper for an American buyer compared to a year ago when the rate was $1.18/€1, or 12 per cent cheaper since the start of 2022. The rate changes daily, but as August approaches the difference between the value of the two currencies remains marginal.
Looking closer at the numbers, today’s (18th July) exchange rate ($1.01/€1) means the cost of the same €500,000 property has fallen around $60,000 - from $565,000 to $505,000 - since January. A buyer could use this saving to make upgrades to their chosen property, or use the extra buying power to purchase a more preferable home that was previously out of their budget.
Here's an example. Take our exclusive development 'Olivie' in Portimão in the Western Algarve. Luxury 2-bed apartments here are priced at €379,440, which would have been approximately $425,000 in January. Now the same apartment costs $384,000, a saving of $41,000 for USD buyers.
A 3-bed apartment in the same block would have cost $603,000 in January, but now is just $544,000, a huge saving of $60,000.
Make the most of your money - talk to the specialists
Remember, the precise cost in dollars would depend on the exchange rate you secured when transferring funds to Portugal through a currency specialist (and not the Interbank rates you see in financial news stories). This is why using a currency specialist to make currency transfers to Portugal is so important.
Ideal Homes’ partner Moving Currency work closely with us to help our clients with dollar/euro (or any other currency) transfers to and from Portugal. Offering a personalised service, they are experts at exchanging and transferring money for overseas property-buyers, as well as servicing their ongoing needs as a holiday home-owner or Portuguese resident. Moving Currency provide highly competitive rates, save on fees that you might pay by transferring via a bank, and will help you move your money safely and smoothly.
Buying Euros in advance
A currency specialist can also arrange for you to forward purchase your euros, which means they guarantee an agreed exchange rate today for a transfer in the future, such a paying deposit or completion. Considering the dollar’s current strength, this could be a clever option right now.
Attentive buyers will have noticed that the dollar began its recent rise against the euro in June 2021, when the rate was hovering around $1,21/€1. By the start of 2022, it was hovering around $1.13/€1 before reaching $1/€1 on 14th July. The dollar’s strengthening has been driven by a combination of uncertainty across the Atlantic, boosting its safe haven status, and positive economic factors back home.
In Europe, the prospect of an energy crunch and recession caused by the Ukraine war has prompted global investors to put their money in dollar assets. Meanwhile, the US is ahead of the global curve in post-pandemic growth and tackling inflation, thanks to the Federal Reserve beginning a run of aggressive interest rate hikes back in March 2022. The European Central Bank (ECB) has not raised its key interest rate since 2011 but is expected to announce a 0.25 per cent rise at its July meeting. Watch that space!
For more information please contact Ideal Homes +351 289 513 434 / + 351 282 788 008