Aussie Dollar Update
The Australian Dollar surged to an 11 year high against Sterling in April after Australian consumer price inflation rose to its highest level since 1991 and Sterling continued to come under pressure from the effects of the credit crunch. The sharp decline from the beginning of the month came as the Bank of England cut interest rates to 5% as they battle with slowing growth and the falling housing market. House prices fell 2.5% in March, according to data released by the Halifax, inviting parallels with the 1990’s housing slump.
For the last few weeks the £ vs $ rates have been in a range between about 2.07 and 2.15, and it will be interesting to see what stance the RBA take on economic policy. The rising inflation signals that they may need to continue with their strategy of putting up interest rates, whereas some feel the issues in America could spark a global recession and the Australians may yet feel more of a pinch from the credit crunch.
Where to next is the million dollar question? There is some speculation that we could see some consolidation towards $2.20/2.25 as the downward momentum of the last few months eases, but such is the current uncertain climate the rates could just as easily fall back to the psychological $2.00 mark.
The problem is nobody really knows! The decision on when the right time is to move your funds across to OZ can be such a hard one given the drop in the exchange rates over the last 18 months but the more information you get at this stage the easier your decision about when to buy will be. Many peoples decision will be out of their hands as it depends on when their house sells, but you don’t need all of your funds available to fix a rate of exchange. A “forward contract” is a buy now, pay later option whereby you fix a rate with just a 10% deposit, and then agree a date to pay the remainder, which can be up to 2 years in the future. This delivery date is also flexible, and can be rolled on at no extra cost which is extremely useful in light of the current timeframes for selling houses!
Some clients choose also to adopt a hedging strategy by fixing some of their currency now to protect themselves against a drop in the rates, but also giving them the opportunity to take advantage of any upturns in the market. Perhaps send it over in 2 or 3 lumps, thus spreading the risk a little bit, and using a “market order” (which is essentially an automatic buying tool at a predetermined rate) in an attempt to achieve any spikes in the rate.
With interest rates currently at 7.25% in Aus and 5% in the UK, the return is obviously better Down Under, and something to consider when doing your sums and making the decision into when to move your funds over. The decision is a very personal one, however, and there is no “right” time as it greatly depends on your own situation. Would you be more upset if you bought your funds now and the rate went up, or held off buying them and the rate went down? How much can you afford to gamble?
Learn about the different ways of moving your funds and how to maximise the amount of Dollars you start your new life with. There is no cost nor obligation to speak to the experts and talk through your situation, so even if you don’t send any funds across for the next year then you have lost nothing, and will have gained a much greater understanding of the markets and how they are affected.
Good luck to those of you moving out this month, and if you have any questions please feel free to get in touch.
And there's talk yet of the interest rates here in Britain falling even further, especially towards the end of the year 3-4%.
Problem is that if I get a job in Australia how on earth am I going to sell my house at a good price?
The credit crunch has put a lot of things on hold here. Inflation is going up, gas, water, electricity and Council Tax all gone up bad style.
Only good thing for me is that my monthly mortgage payments are going down but when it comes to selling this is the problem. A lot of money tied up in my house is going to fund our move, if that ever happens.
When it does it's going to take months to sell the house!
Yep the cost of living has gone up by 11% year on year, I've just had the biggest pay rise of my life 4% so I have 7% less money in my pocket, thanks to Labour.
could you imagine if your boss called you in and said you are having a 7% pay cut, you'd go broke, that is what is happening to the whole country, my house has devalued by 2 thousand pound, 4 thousand dollars in 2 months, I will be selling at a loss at this rate still oweing mortgage money on Oziie dollars!!
I haven't been out socially for 2 months now as I simply can't afford it, my friends go around each others houses with a bottle of wine as it's the cheapest thing to do, in 2006 I took my girlfriend to Australia for a holiday, for 2 weeks, this year we are staying in the UK and going camping as I cant even affor a caravan for a week!!
Get me out of this bloody country, it's collapsing around our ears!!
Last edited by paul_smart; 09-05-2008 at 03:12 PM.
hi all, IT is worrying about the £ ? i cant even think about the $ Just put house on market 3 weeks ago and not even a sniff yet!. IVe been told that we are not getting many hits on the net ?. so might be here for xmas ?. do i drop another 20 k ? no balls ill wait for a few weeks let the blxxdy state agents earn thair money for a change?.Don't cost anything to change estate agents ?. good luck to all . Paul
you earn less in adelaide so any savings on fuel and housing prices (which have risen due to various reasons and are now being squeezed due to the global credit crunch) make the overall cost of living in adelaide certainly more expensive than in the NW of england
house prices around preston / blackpool - currently estate agents are telling us £200 k are sellig for £180 so its all doom and gloom for sellers ad its looking like a long haul credit crunch.....good news for anyone buying £ and property in uk at moment
my advice keep your house and your £ in pounds for a year or two and until you know for sure youre going to stay in oz long term - its very very expensive standard of living now in a delaide when youre looking at curret exchange rates
you need good luck
Here Here!!!! prices have soared everywhere, not just UK..thats the dependence on oil! Its not cheap in Adelaide, but if you are in decent wages then fine, but a lot arent.
Originally Posted by muppetbro
I would say if you are thinking of going back to UK, do it now , with more pounds for your dollars and a dead housing market there, you might even recoup some of your money youve spent coming out here!