What is the true value of a Euro?


With all the ruckus that gets thrown into news headlines, it can sometimes be difficult to remember just what the longer term looks like.

If anyone is in any doubt why Australian’s are currently NOT spending money in shops, and are instead going on overseas holidays or going online to spend their currency then this little chart will help bring understanding. It shows the Euro charted against the Australian dollar since 1996 – that’s 16 years of history folks.

16 year history of the Euro charted against the Australian dollar.

So Europe is currently 42%(!!!) cheaper for Australians than it was 3 years ago.

 Winners and Losers in markets

So there will continue to be winners and losers in markets throughout Australia. It is clear that the world sees less relative value in the Euro at the moment – but we should remember that the Euro remains one of the larger global currencies, and so the above chart is more a reflection of the risks in the Euro than it is a statement of love for the Australian currency. You can be sure that the position will be reversed the second the Euro community sorts out their backyard. Fortunately for we Australians, it doesn’t seem that anyone in Europe is actually in a position to make the changes that would do this. At least, not in the short term – and that means more overseas holidays, and less discretionary spending here in Australia.

A little bit of perspective…

In case you haven’t been exposed to this little side of the world, here is a look at just how far away from the global mean our local property market has moved…

What can you buy with $570,000 here in Perth? Maybe an average 2 bedroom apartment or a modest home in the average suburb…?

What can you buy when you take $570,000 of those valuable Australian dollars, and use the same amount of money to hunt for a property in Euroland?

Well, quite a bit as it turns out. With only a cursory scan of the great expanse of the internet, i was able to track down this little villa on a hill…

What does a villa on the French Riviera cost these days?

How about selling that home in __________ (insert your suburb), and buying a villa?

Oh, did i mention that the hill overlooks the French Riviera?

The French Riviera

Holiday home in Yanchep or a villa on the French Riviera..? mmm....

If you are interested, here’s the link.

So the next time someone tells you that Perth house prices are exactly at the level that they should be at, have a ponder at just what the average home here costs versus what that amount of money would buy overseas. If you haven’t already looked, you’d be shocked.

Of course, you have to pay attention to the Great Disclaimer – this is not personal advice, and i certainly am not suggesting that you go out and buy a home in France…




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