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It’s expensive being an expat: living costs up as property values plummet

Thursday, July 26, 2012

It is expensive being an expat, according to a new report, as living costs soar and property values plummet.

Research by Post Office International Payments found that living costs for expats have risen by 11 per cent since 2011, almost four times the UK inflation rate. That climb is even steeper in the Eurozone, where costs have increased by 15 per cent.

At the same time, 72 per cent expats said that their property values had dropped - and, to make matters worse, they are spending an unnecessary £217 million on bank transaction charges when transferring funds abroad.

Only 3.5% of over 900 people surveyed had seen no increase in costs over the past year but almost half (48.4%) said they had paid out more than 10% extra on household expenditure, motoring and meals out. Nearly two-in-five (18%) said they felt that these prices had risen by over 20%.

With confidence at a low ebb, more than two-thirds (67.5%) said that the price rises had already impacted on their lifestyle and would mean making significant cutbacks this year.

The surge in prices was even more marked in the most popular European countries for expats, according to the Post Office report. Spain, Cyprus and Portugal were particularly hard hit with food and fuel prices named as the key issue.

Two-in-five expats in Spain said the cost of eating out had risen over 15%, while 71% reported an increase of over 10% year-on-year for fuel. All of the Cyprus-based respondents said that prices had increased with 30% saying prices had risen by over 20% and a quarter reporting a rise in the cost of food of more than 20%.

Similarly, 70% of homeowners in Spain said that their property had fallen in value since 2011. More than two-thirds of those living in Cyprus reported a drop in the value of their home. In Portugal more than three-in-five homeowners said their home had lost value in the past year.

UK expats owning homes in France fared better. Only 16.4% of respondents believed that the value of their property had dropped over the past year, with over half (52%) saying their home was worth the same as 12 months ago.

The Post Office Expat Payments Index also found that over half (51%) of expats transferring funds from the UK did so via their bank. Despite many expats saying they needed to make cut backs, they potentially waste an average of £1583 each a year by paying bank charges on these transactions rather than using a fee-free International Payments specialist like the Post Office. This figure rises to as much as £300 for those banks making higher charges.

 

The £158 wasted would be enough to pay for 130 litres (28.6 gallons) of petrol or a pair of return flights between the UK and the Costa. Alternatively £300 would buy 12 meals out for two with wine in the Algarve.

Michael Gibbon, Head of Post Office International Payments, said: "With rising prices and falling property values overseas, it is no wonder that confidence is low amongst the expat community. However, many expats are sending hard-earned cash down the plughole simply by paying charges to transfer funds via their bank. Depending on which bank they use and how much they transfer, they could lose hundreds of pounds every year that could help offset the higher prices for food, motoring and household necessities.

"With sterling experiencing a four year high against the euro, people who send funds in larger amounts once or twice a year might want to transfer smaller amounts more frequently to take advantage of the improved euro exchange rate. If they do that through a bank they will pay hefty bank charges but with Post Office International Payments it will not cost them anything."

 

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