If you’re planning to buy a ski property in 2025, you need to ask yourself: have you protected your budget?
You only need to look at the headlines in 2024 to see how unpredictable and turbulent the world can be. A second Trump presidency, a surprise election in France, a revolution in Syria. Even with events that happened to a schedule, such as the US election, had an immediate impact on the global markets because of their unpredictable outcomes.
Off the back of a Trump presidency, the dollar rose. The news in France saw the euro stumble. It’s still too soon to know what the full effect of a new government in Syria will do to the markets. However, because we can’t know what will happen from day to day, it puts your money and plans for 2025 at risk.
If you don’t protect yourself, your hopes of buying a ski property in 2025 may cost you significantly more than you planned or unravel entirely.
Fluctuating exchange rates
When the market responds to instability, the exchange rate fluctuates. Sometimes these rises and falls can be severe. We have seen major events, such as the Brexit referendum, lead to exchange rate changes as large as 5% or even 10%.
On a high-value real estate item like ski property, the impact of a 5% can be significant. If the market went against you, a €700,000 property would cost an additional £35,000. Some buyers would struggle to pay such an increase.
When you consider that property purchases can take three to six months to complete, the potential for exchange rate shifts opens even further. Could you still afford your property if, instead of 5%, there was a 7% or even 10% increase?
It’s worse for ski properties
While fluctuating exchange rates impact any overseas purchase, they can cause particular frustration when buying a ski property because of the comparatively limited stock.
As highlighted in Knight Frank’s 2024/25 Alpine Property Report, 27% of alpine property purchasers intend to keep their property in the family, with a further 23% undecided. So, once stock goes off the market it may be years until you see it return to sale. Compounding the problem is the limited scope of development in some locations, meaning there is an upper limit of how many properties will be built within a resort.
With all this in mind, if you have your eye on a particular property or resort and you miss your opportunity to purchase because the impact of exchange rates on your budget means you can no longer afford it, you may have to wait years until you find another chalet that suits your needs in your desired location.
How to protect yourself
With any large overseas transaction, there is a simple way to protect yourself from fluctuating exchange rates. Specialists, such as Smart Currency Exchange, can lock in an agreed exchange rate with a forward contract. This guarantees that whatever happens in the market, your money will hold its value.
You can lock in an exchange rate for up to 24 months, so even if you’re still looking for the right property you can keep today’s exchange rate for two years.
There is already enough stress from things you can control when searching for your dream overseas ski property. Don’t let global events, market economics and exchange rate fluctuations create even more pressure. Talk to a currency specialist today and relieve that tension.
