What on earth is happening to the “Great British Pound”?
Short answer: It’s sinking! More detailed answer….
When I first posted about house hunting in Australia back in February, I assumed an exchange rate (correct at the time) of 2.2 Aussie dollars to the pound. Also, I talked about a house that would have cost you £217,000 at that time, but now, six months later, that same house would cost you more than £248,000.
Why? Have house prices soared in Australia? No. This is what has happened…..
For an up-to-date exchange rate please visit the Reuters GBP/AUD chart.
The Great British Pound appears to be in some kind of nose dive situation and the Australian dollar is today, I believe, sitting at a 13 year high against sterling.
If you are looking to move to Australia from the UK and you have been keeping your eye on the currency movements, I kind of know how you feel. When we sold our UK house back in September 2007, the exchange rate was something like $2.40 to the pound. But that was when we SOLD the house.
By the time we exchanged, completed and got our hands on the cash the exchange rate had dropped to around $2.20. We then had a small window between October the 23rd and November 14th in which we needed to exchange our pounds into Australian dollars to pay for our new house. In the end, we settled for an exchange rate of $2.26, which we were not too pleased with. We felt we ended up paying £16,000 more for the house in Australia largely thanks to Northern Rock!
Today, that deal doesn’t seem so bad.
$2 is the new $2.50.
Australia (from the UK) is now 25% more expensive to move to than it was a couple of years ago and 50% dearer than 10 years ago when you could have got three Aussie dollars to the pound. For a very long time, rule of thumb conversion was $2.50 to the pound or one Aussie dollar equals 40p. That rule of thumb seems to be long gone and $2 is the new $2.50.
Whilst the English pound has dropped against the US dollar over the same period, the fall hasn’t been so drastic ($1.80 down to $1.63). But as the US dollar has also been quite erratic, there were plenty of opportunities in that time in which to buy at two United States dollars to the pound.
For Americans, it’s not quite so bad. Four years ago you would have got about $1.30 AUD for one of your American dollars and today you’re getting nearer $1.20.
For South Africans, four years ago one Rand would have bought you around $0.22, but today you would be looking at just $0.16.
The euro on the other hand has fared quite well over the last four years, you would have got around $1.60 AUD for a Euro back in 2005 and today you can get just over $1.70.
Everybody suffered a big wobble during the global financial meltdown last year and Australia’s wobble seemed to be bigger than most. The lesson to learn from that is, if you have spare cash and you are waiting to see if your application to emigrate to Australia is accepted, make sure you are ready to trade in the currency markets, because if another financial crisis hits the globe, you want to be ready to strike.
So choose a reputable foreign exchange service and signup for an account. These accounts can’t be opened up within minutes over the phone, you need to provide certain proofs in order to convince them you are not just another money launderer. Apparently there are lots of them about.
But my best advice is: If you’re thinking of moving to Australia, hurry up! It’s getting dearer every year.