"Although sterling climbed to a three week high against the euro today...analysts don't foresee it going beyond 1.3 to the pound this year."
(Premier French Property) posted on May 30, 2008
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What is three weeks when you are investing for the long term in Real Estate?

In fact, year on year as of today, the pound has lost -17.24% of its value against the euro:
On July 2, 2007, one euro cost 67.46 pence. Today the same euro will cost you 79.09 pence.

These are interbank rates. The UK based investor would also have had to pay commission on the exchange for a real estate purchase, although the proportion of the relative pound depreciation over one year would still be roughly the same as the figure given above (-17% +).

With the benefit of hindsight, assuming that a purchase had been paid for in France 12 months ago, the gain by the euro's appreciation should have more than offset the loss caused the the drop in the prices of property, with a hypothetical gain of maybe about 10% over the year, depending on where the property was located. In an area like the Poitou-Charentes, the problem would now be to find the rare buyer for your holdings at even today's lower prices. He who had invested in the more solid markets of the Cote d'Azur or Paris would be better off.

This analysis underlies the importance of currency fluctuations when making your decision. A continental investor now looking to buy into the dropping British market would have the double advantage of cheaper prices and a strong currency.

The current situation certainly does not favour the UK based investor in France, given the continued weakness of sterling, especially since real property prices are falling and the fall seems to be accelerating.

One thing that I do believe is that the current rate of inflation could, in the long term, be favorable for the patient investor, because real estate prices do traditionally tend to keep pace with local currency depreciation - even if, at the present time, there appears to be no sign of this quite yet.

Finally, if you want some bad advice, just go ask an "expert"!

One month after the post above, the pound had already slid below the 1,30 euro per pound level which the analysts anticipated at year end. It currently stands at 1.265, whereas a year ago, it took 1.485 euros to buy a pound.

FXHistory - Historical Currency Exchange Rates