PL 83

PROPERTY LETTER 14th August 2009.

Dear All,

KEEPING MY PROMISES.

In my last Property Letter (which was my first attempt at separation and entitled “Just Villas”) I told you that we had quite a number of very interesting apartments becoming available, including some in the most affordable price range. Today you have them – a very good selection of interesting apartments arranged in price order. I recommend that if you are pressed for time you find your level and look at properties in that range rather than reading through properties that are of no relevance to you – being either far too small, or far too expensive.

If you have more time for reading however I hope these Property Letters are educational, serving to give you a very thorough overview of the entire market from top to bottom. I would remind you that every property that I include in these letters has been selected from many, and the trash thrown out. So what you are seeing is an “interesting” cross section of the market – properties that are really worth considering. Some are priced to sell and some are priced ‘optimistically’, but we can look at them on a case by case basis as nearly all would be subject to at least some negotiation.

Before the recession I used to write a bit about Cannes, The Cote d’Azur, and France….To make these letters more interesting and newsy! And I will get back to that. (More promises for me to keep!)

However, since the middle of 2008:–

“It’s the economy, stupid!”

The phrase was coined by Bill Clinton’s campaign team in 1992 when George Bush (senior) seemed unbeatable and American eyes and thoughts were fixed on the end of the Cold War and the War in the Gulf. The fact was that America and the world were also trying to emerge from a recession (as we are today) and the phrase struck a chord with the people; Americans sat up and listened, and Clinton beat Bush!

Maybe the phrase was the precursor to:-

“Yes. We. Can.”

This now famous phrase (used in a song by the Pointer Sisters 1973) re-emerged in January 2008 after Obama won the South Carolina primary! This is how his victory speech ended:

And where we are met with cynicism and doubt and fear and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of the American people in three simple words: Yes. We. Can.

Isn’t it amazing what a phrase can do? It is the sheer positive power of it that got into the heads of the American people. They carried the phrase to the ballot boxes with them, and there is no doubt it helped carry Obama and his “yes we can” team all the way to the White House!

We can all be terribly afflicted, especially in tough times, by negative thinking – we can just freeze! We can simply stop doing anything at all for fear that it might be the wrong thing! The President of the South African Creativity Foundation Dr Kobus Neethling summed up this condition as follows: “One of the greatest stumbling blocks for the entrepreneur is negativity. It’s a subtle disease that sends the brain into problem-mode thinking. Others around you realise it and are influenced by it, to the disadvantage of everyone and the business. And when times are hard people are even more likely to express negativity – every day we are told how bad the economy is – and eventually that becomes part of our belief system.”

News of the Recession 2008/09.

Thankfully the news is changing:
It’s been tough but France and Germany were officially out of the recession in the 2nd quarter – by a meager +0.3%, but out of it none the less. The 16 member Euro-Zone as a whole which excludes the UK and Switzerland (who don’t use the Euro) was still slightly negative at -0.1 %, brought down largely by Spain and Italy who are the third and fourth largest economies, and they are still in trouble.

It has been a deep recession and it is not entirely over yet, however the FTSE, Wall Street and markets around the world are up, some of them recently recording consecutive daily increases not seen for many years. House prices in the UK were up 3% in July, and mortgage approvals up 23% so it seems some of the most extreme doomsayers might have been wrong. The French National Association of Estate Agents (FNAIM) reports that the level of enquiries has risen 63% - 23% coming from investors. Banks are far from out of the woods but the major ones such as Barclays and HSBC are posting modest profits again. On the down side, and militating against the recovery, unemployment and house repossessions will continue to rise as they inevitably do post-recession for another year or two.

The truth is though that nobody wants to listen to a pessimist, recession or no recession. Nobody wants to hear whining and complaints and Clinton and Obama (who both came in on a recession) and all great leaders before them learned to look for the positives – and that is what made them into winners. We can all learn from them as we look towards emerging from this recession “on top” – whatever that might mean to each of us individually.

FRENCH FANTASY.
(Courtesy of Marianne Heron writing in the Western Cape edition of PROPERTY MAGAZINE, July 2009)

“An incomparable lifestyle and a stable property market make buying in France an attractive proposition”.

I am so pleased to read a feature length article such as this in a leading publication. Much if not all of what she says is precisely in line with what I have been writing in Property Letters since the early days of this recession.

• How is the property market faring in the light of what the French refer to as “la crise”? The comforting answer is: considerably better than the US or the UK.
• France is a model of fiscal rectitude where banks’ lending policy is concerned, so the market there hasn’t been hit by the boom-and-bust experience.
• Historically the country has had stable prices with increases in line with inflation.
• Although the country has a high level of public debt, private households are less indebted, helped by the French habit of “petites épargnes” (saving for a rainy day)
• France is not a speculative market, such as Dubai or the UK, and French property legislation does not encourage speculation.
• The level of enquiries from investors suggests that because of the state of the market it could be a really good time to buy, as you have good negotiating power.
• Homebuyers are well protected in France. Regulations require technical reports, paid for by the vendor, to show: the condition of the building on sale; how much energy is required to heat the property; that it is free of asbestos or termite damage; and so on.

In short owning property in France for pleasure or as an investment earning a reasonable return, or a healthy mixture of the two is not necessarily “French Fantasy” at all.

With a dose of “yes we can” and the want to do it, it doesn’t take much to start. Very few of us start with the property of our dreams, but once we are in the market the best way forward is “up” and many of us are doing just that after a few years – trading up to bigger and better things. French banks are lending, interest rates are low, and some people who are unable to go it alone are forming small teams to achieve a foothold in France with family or like minded friends. There are many ways to do it if the will is there.

With kind regards,
Guy.