Europe, a bargain for US homebuyers
The travel revival, amassed savings and now a currency advantage mean US buyers are eyeing European homes with interest.
2 minutes to read
Tasked with compiling our annual Prime France Report I sat down with our sales team back in May to understand what key trends they were observing.
Our seven-strong team all cited one trend: the rise in US enquiries.
I did some more delving and discovered searches for French properties by US-based buyers via Knight Frank’s website were up 37% in the first five months of 2022 compared to the same period in 2021. Read more here.
But fast forward two months and more colleagues across Europe are referencing the same trend.
The stalwarts of Paris, Venice and Tuscany are attracting a higher volume of US interest but so too are Mallorca, Sardinia and the South of France.
Mark Harvey, Knight Frank’s Head of International, comments: “In the past US interest has been focused on cities offering culture and connectivity from Rome to Paris and from Barcelona to Florence but we’re now seeing US buyers target traditional sunbelt areas which is a departure from the norm.”
Why are US buyers active?
The currency play is the biggest factor. The euro and the dollar reached parity on 13 July for the first time since 2002.
A US buyer currently enjoys a 16% discount when buying in any of the 19 Eurozone member countries compared to July 2021 based on the shift in the exchange rate alone.
With the Federal Reserve expected to raise rates by 75bps this week and the ECB’s next decision not until 8 September the dollar may yet strengthen further.
But add to this household equity. Data from Oxford Economics shows US households accumulated $3.7 trillion in extra savings during the Covid-19 crisis. Stimulus payments, rising stock markets and fewer spending choices led to a massive savings boom. This has put a second home in reach of more US households, not just retirees and the wealthy.
Then there’s the slump in equities. In 2022, the S&P 500 has posted its worst first half of the year in 50 years. With recession risks rising and after two years of intermittent lockdowns and travel bans, some investors are looking to property not only as an inflation hedge but for the lifestyle gain it offers too.
Finally, 12 June 2022 the Center for Disease Control (CDC) in the US announced that air passengers travelling to the United States from a foreign country no longer required a negative Covid-19 test or documentation of recovery from Covid-19 before boarding a flight.
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View properties in locations proving popular with US buyers such as Paris, St Tropez, Tuscany, Venice, Barcelona, Mallorca and Sardinia.
Contact Mark Harvey or Jack Harris to discuss your property requirements.