The amount it affects the people who visit your site and your SEO isn't much at all but their are other, possibly more important things to consider.

It all depends on your website and who your making it for. A lot of it is Public Relations which you should really consider. Most good LOCAL design and hosting companies host locally. If you've a local product you want to be seen to buy local, support the local community and get your website hosted locally.

This is a true story:
In a European country their was an election in the last year. The main political party were pushing this promise for creating loads of new jobs particularly skilled IT jobs to get the country out of a recession. They launched their website for their campaign and got an outside company to design the site and run it. It all looked great but they got a lot of criticism as they had got an American Company to design the website and it was hosted in the USA. It was PR disaster just before an election and they had to move the hosting of the website to their own country to show they were committed to keeping jobs at home.

Sometimes you have to consider things beyond the obvious.
Mr Happy Reviewed by Mr Happy on . How does server place impacts on seo? I need advice. To run local business person wants to have website. I know there are lots of cheap hosting providers abroad. But does cheaper is better? If site is hosted abroad, so it has ip assigned to that country... More of that we all know that local ISP gives less broadband speed for abroad, so it means low response rate/speed from website hosted abroad... Am I right? So if that impacts on loading speed, how does that impacts on seo? I mean that it is hosted abroad? What should I Rating: 5