Millions of UK expats are considering a return from living abroad because their income and savings have been eroded by the plunging values of Sterling and property, it is claimed.
The economic downturn has slashed their income by a third. Fears over job security and falling property prices are also giving expats second thoughts, especially those in Spain, according to recent research from foreign exchange specialist Moneycorp.
It is estimated that 845,000 Brits living in Spain and France have suffered from an average 8% drop in house prices which have effectively wiped €30,000 off the average property on the Costa del Sol.
Sterling has fallen from over €1.50 to £1 in January 2007 to close to parity, taking a terrible toll on the estimated 5.5 million British expats and particularly the 1.1 million pensioners living abroad. Moneycorp research shows that 70% of all expats are now considering returning to the UK, Adam Jordan, Senior Dealer at Moneycorp, told CNBC.
Pensioners living abroad have been hit the hardest as they rely most heavily on their savings and pensions built up in the UK. They’ve been hit by a declining pound and falling interest rates.
One in five expats has a Sterling pension, with more than a quarter of Brits living in Spain, 28%, and a third of British expats in Germany relying on this as their core source of income, according to Moneycorp.
The number of British homeowners downsizing or selling up and sending money back to the UK doubled last year, another foreign currency specialist HiFX reports.
It has seen an 180% increase in the number of euro to sterling transactions and an 11% increase in the number of US dollar to Sterling transactions in the past six months, compared to last year.
More people over 65 than any other age group are repatriating. ’The pound’s fall to historic lows in recent months has meant the cost of living or running a holiday home on the continent has risen to unaffordable levels for many people,’ said Mark Bodega from HiFX.
A weak property market is also proving to be a nightmare for many of the estimated 1.5 million Brits who own homes abroad. Many are being forced to sell their property at a loss, particularly in countries like Spain.
Tim Finch, head of migration at think tank the Institute for Public Policy Research said the trend is likely to continue. ‘Generally, the big wave of lifestyle emigration where people got their place in the sun for a better life was a reflection of the boom years when you had high house prices and decent pensions,’ he said.But weak Sterling has had the opposite effect for those who have an income in Euros, for example from renting a property. Sterling’s slump means they get far more Pounds for their Euros.