British people who bought overseas properties in second home and investment hotspots without a foreign currency mortgage four years ago will, on the whole have made significant financial gains, despite the recent volatility in global property prices, claims the latest research from the FX team at Close Brothers Limited Close Treasury.

According to the company, those who bought an Italian property in Euros in June 2005 would have seen the Sterling value of this increase by around 65 percent four years later, aided by a 30 percent rise in property prices over that period.

This increase was supported by the increase in value of the Euro by 27 percent compared to Sterling over the same period.

In the last year alone, a UK investor in the Italian property market could have made a return of over 10 percent, despite just a 3 percent increase in local property prices, due to the strength of the Euro.

In the United States a combination of declining house prices and a weakening Dollar since the end of Q2 2005 has resulted in a loss of 5 percent on investments. But the position could have been far worse for investors as the US property market has since fallen by 13.5 percent which has been offset by favourable exchange rates for UK investors.

However, UK investors who bought a US property using Sterling in June 2008 and then sold it 12 months later in Dollars and converted back to Sterling, would have made a 21 percent profit. This is despite US house prices remaining static and a strengthening Dollar during the period.

Likewise those Brits who invested in property in Spain in June 2005 would have seen the Sterling value of their investment increase by 59 percent four years later, due to a combination of rising property prices and a fall in the value of Sterling against the Euro.

Taking these two factors into account, Close Treasury, which offers leading interest rates on deposits of any size or currency as well as a personal and professional service, says that the Sterling value of properties bought in Portugal, France, Switzerland and Spain for example in June 2009, were up 24 percent, 47 percent, 54 percent and 59 percent respectively on the corresponding figure of this year.

Mark Taylor, Head of Foreign Exchange, Close Treasury said: “When British investors calculate the value of an overseas property they bought a few years ago, they not only need to look at how real estate prices have changed, but also what has happened to the exchange rate between Sterling and the local currency.

“Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms.”

Indeed, between June 2008 and June 2009, property prices have fallen in France and Portugal for example, but if you convert the value back into Sterling, it would have actually increased.”

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