FT - fall in interest rates draws buyers to France

There's a lovely article in the Financial Times that you can see here. It starts with this statement:

Wealthy borrowers are buying second homes in France after mortgage rates fell to the lowest level since the postwar period last month.

Mortgage brokers have reported an increase in the number of large loan deals being arranged on French property purchases over the past few months, driven largely by the low mortgage rates available. France has traditionally been the most popular location for British buyers of top-end second homes.

It then goes on to say:

The French mortgage market has remained stable during the credit crisis, with banks and lenders showing a strong appetite for lending to foreign investors.

The majority of lenders are happy to lend around 80 per cent loan-to-value – and some offer up to 100 per cent of the value of the property, though buyers must borrow at least €300,000 and have minimum earnings of €90,000.

Buyers can get rates as low as 2.20 per cent, available up to 80 per cent loan-to-value. Borrowers can choose between variable rates, capped variable rates and fixed-rate mortgages – which tend to be the most popular in France.

You can see a "best buy" table of French mortgages by clicking here.

www.cognacproperty.com

Buying agents currently going the extra mile (or kilometre)...

I had a wry grin when I read this article on The Move Channel.

County Homesearch has a network of buying agents across the UK and they say that with the current market they are having to look a lot harder to find houses that fit their clients brief.

County Homesearch has reported a 100% annual increase in the number of properties visited by its agents before finding the right home for their clients, with some visiting up to three times as many properties now compared to a year ago.

This certainly reflects the changes in my own business over the last 18 months. I have just finished a search that took me from the northern Charente to southerly Charente Maritime.

There's 100 km's between them which I guess highlights one of the major differences between agents in the densely populated UK and those of us in rural France. My clients were very specific on the type of house & gardens that they wanted, as well as the kind of countryside they were looking for. However, when it came to exact location they were less fussed.

If you don't live and work over here you would have no chance of properly scouring the market over this kind of area.

Fortunately I'm aware that my clients have financing in place and are keen to move as soon as I have found the right house for them.

Don't feel too sorry for me though.....I have attached two pics showing the views at a couple of the stunning properties I have been lucky enough to visit.

www.cognacproperty.com

French interest rates lowest since 1945

I saw an interesting article by Sextant Property over the week-end.

It points out that interest rates in France are the lowest they have been since 1945 with an average of 3.3% last month. They say:

The lowest previously recorded rate was 3.36% dating to the fourth quarter of 2005, the authors of the study remind us. “The financing conditions of the banks are still excellent, and their active commercial strategies are the root cause of this record”, explains Michel Mouillart, economics professor at the University Paris X-Nanterre.

If you read my previous post about comments made by the US investment guru John Paulson it adds credence to the arguments made by the "buy now for long term growth" supporters.

You can see an up to date "best buy" table of mortgages by clicking here.

www.cognacproperty.com

Investment guru Paulson bullish on property

"If you don't own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home."

These are the bullish words uttered earlier this week by John Paulson.

"Who is he" I hear you cry...well, he's the highly controversial multi-billionaire investment genius who became famous in the USA for going "short" on subprime mortgages a few years ago.

He told a standing room only crowd in NY's university club that they are on their way to double digit inflation which will kill the bond market and restore strength to equities, gold and property.

You can read more about his speech in this blog on the Forbes website.

With some great long term mortgage deals on offer I have to say that I think his timing may well prove to be impeccable even if his words may seem a tad provocative given the current market situation.

ps: it was thanks to a tweet from a Chicago based realtor @homepartner that I picked up on Mr Paulson's speech.

www.cognacproperty.com

The 5 best things about living in France

I'm often asked about our life over here and how it differs from our experiences in the UK.

My stock reply is that it isn't necessarily better it's just different and that those differences happen to suit our personal circumstances. Listing five that I like is pretty arbitrary and a straw poll of one person should probably be taken with a pinch of salt.

Of course, this list is also based upon our life in rural Charente and our personal experiences out here since 2003. If you're an expat reading this in central Paris then you may well see things differently!

1. The education system - let's kick off with a controversial one as the French system has taken a bit of a kicking in the press recently. We have found the teachers to be experienced and caring and we like the fact that they are sometimes quite strict. Classrooms are disciplined with polite pupils. They are also well funded and even in our rural village the teachers use "state of the art" kit. We have regular meetings to discuss how the girls are progressing and can check their regular test results (and attendance record) on a secure online site. Oh and the lunches are excellent.

2. The role of the "family" - this plays a huge part in life over here and we love it. Family life is cherished and you can really sense how close knit the community is. Maybe the school hours have something to do with it as we see plenty of grand-parents looking after the youngsters while the parents are still at work and then everyone sitting down to eat together. I can't name a single one of our French friends who allow the kids to eat in front of the TV.

3. The lack of importance given to "stuff" - I know, it sounds weird doesn't it. When we were living & working in London we had a simply huge joint income. We didn't save we just bought "stuff". My friends come to visit from the UK and they come armed with Blackberries, i-pad's, i-pod's, laptops and all kind of apps and gadgets. Sure it means that they are in constant communication and can download the latest episode of X Factor, Big Brother or Strictly Come Dancing but come on.....the endless pursuit of "stuff" hasn't really caught on here yet and I hope it never does.

4. The climate - again, if you're up in Brittany you might beg to differ but it makes a big difference to our life here. On average we get around 2,400 hours of sunshine a year and it helps bring a smile to our face. Put simply I'd rather be on a bike ride with the girls in the sunshine than in the rain.

5. Property prices - they are affordable and relatively stable. Sure you are never going to get the potential for short term gains that you can get in the UK but if you look at what you actually get for your money it's hard to beat. The average price of an "old" house in and around Cognac is currently €136,700 and, in general, I think they are simply amazing value for money compared to other parts of Europe.

So there we go. Of course, it would also be easy to create a list of the worst things about living here (red tape, lots of strikes etc) but for the Downie family they really do pale into insignificance against the positives.

www.cognacproperty.com

How to value French property...

Last month I was mandated by some international clients to find a chateau & vineyard close to Bordeaux.

The lead originally came from the team at FrenchEntrée and they have some excellent existing relationships with immobilers who specialise in this type of property.

We sourced some spectacular places and so, last Saturday, I met my clients at their hotel and we spent a day viewing a couple of them.

We stopped off at a local restaurant for lunch (it's near Langon and is called Le Nord Sud, I heartily recommend it...you can see their website here) and over a terrific meal we had an interesting discussion about how you value a chateau & vineyard.

Clearly one needs to look at it as an existing business but then you also need to factor in:

• the value of the chateau itself and any other buildings
• the value of the vineyard and land (soil type, orientation)
• the stock of wine currently held in the cellars
• the machinery that comes with a working vineyard
• the "x factor" that is given by the history of the property & grounds

Some of these are incredibly specialist areas.

I have a very good friend who is cellar master at Polignac which is one of the leading brands of Cognac. For ten years he was also the cellar master at one of the leading Bordeaux producers in the Medoc. He tells me that while he is perfectly capable of tasting and testing the existing wine stock he would not be able to give an accurate forecast as to its worth - that's a different job entirely.

Similarly, one of the chateau's that we visited is the former home of one of the world's most famous post impressionist painters. What kind of value does this add to the property?

So, at the end of our lunch we decided that any valuation has to include a combination of balance sheet analysis, collective expertise and comparable evidence...but it's also going to include plenty of shoulder shrugging and a dash of "je ne sais quoi".

www.cognacproperty.com

It's "vendange" time in the charente

The weather is still pretty decent at the moment so we've been sleeping with the windows open.

For the last couple of days we've been woken at 6am by the local viticulteur driving past in one of these beasts on his way to work...they're quite a sight, almost like something out of War of the Worlds.

The local lanes are also buzzing with the smaller tractors scurrying along with trailer loads of grapes. They need to crush them as soon as they're picked and it's always fun watching our totally laid back Charentaise friends and neighbours suddenly rushing too and fro....it only lasts a few weeks mind before they revert back to norm.

This year it looks as though it's going to be a decent harvest so the 5,000 farmers in the Charente should be fairly happy.

For info, a hectare of vines in Grand Champagne costs roughly €35,000 (compared to an average agricultural value of €5,000 across France) and around 150 million bottles of cognac are sold each year.

My good friend Andy has some much better photos (and more interesting accompanying words) on his blog which you can access here.

www.cognacproperty.com

Guest blog - The internet enabled agent

Jim Muttram - MD, Reed Business Information

I first became involved with the commercial property industry in 1995 when I was asked to move to Estates Gazette and launch EGi. At that time we weren't even sure that it should be an internet delivered product; the majority of the big services at that time were dial-up including giants like Compuserve and AOL.

The internet was only just making significant inroads into the US that year so it was very early days for an internet service in the UK - and the property industry was one of the first ones in.

The challenge in those first few years was to talk to as many surveyors and property professionals as possible as convince them that the internet was here to stay and that information on the desktop was going to be the way of the future.

We achieved that, and became the leading information service for the sector, but in the subsequent years other industries took up the baton in eclipsed internet usage in property. I moved off EG in 2004 and it wasn't until 2008 that I got another chance to work with the sector again.

And what I found was surprising - technology use in property was still a bit behind the times - property data was still being manually collected using incompatible spreadsheets and phone calls rather that the slick data collection I had seen in other industries.

And yet smart phone and Blackberry use was among the highest I had seen.

Desktop analytics was still in its infancy in the industry. And yet I noticed thousands of property people on LinkedIn.

I think I now know the answer to these conundrums; the property industry is a people industry and it is very mobile. While they have been happy to use desktop tools to do their work they've never been truly happy with the situation.

So I sense that we may be on the verge of a real tipping point here. Mobile, after so many years of promise, is finally here. And social media has finally arrived big time - LinkedIn, for example, has more than 70 million users. Putting the two together, and adding in location services, and enhanced reality capabilities such as Layar I can see very exciting things about to happen and the commercial property industry regaining the lead that it once enjoyed all those years ago.

Jim Muttram, Managing Director, Reed Business Information
jim.muttram@rbi.co.uk

RBI are Europe's biggest online and offline publisher.
Jim looks after the prestigious Estates Gazette Group and is also responsible for the ICIS and Flight groups.

France tops "best place to live in Europe" poll

I could have been mean here and used the Daily Telegraph headline of "British Isles - worst place to live in Europe" but I simply don't believe that's true.

It's that time of year again when Uswitch announce the results of their quality of life index. You can see their full press release, including all the methodology and tables here.  They say:

France, which has topped the index for the second year running, enjoys the earliest retirement age, spends the most on healthcare (11% of GDP) and has the longest life expectancy in Europe. Its workers also benefit from 36 days holiday a year – compared with just 28 in the UK – and it comes only behind Spain and Italy for hours of sunshine.

As it stands, people in the UK can expect to work four years longer and die two years younger than their French counterparts.

I do love that last bit....now, what shall I do with those twenty four extra months?

www.cognacproperty.com

French estate agents - the tricks of the trade

I'm just back from a trip to the UK where I met up with the team from FrenchEntrée and my colleague Rebecca Russell from Cote Abode who had flown in from Nice.

After a full on day of brainstorming and plotting our marketing strategy for 2011 we hit the pub and, over a chilled glass of wine, started telling war stories of the tricks that some local immobiliers get up to.

Rebecca kicked off with with the tale of a local agent on the Riviera who had added 10% to all of the room sizes in an apartment. This would be bad enough in the charente where prices are low but it's a dastardly trick in Nice.  Fortunately Rebecca is eagle eyed, diligent and a terrier when it comes to negotiating on behalf of her clients.

I then pitched in with a story I have previously posted - the one where an immobilier in Cognac put a picture of the next door house on his website and in his shop window because "it was prettier".

Guy had a similar tale.  He had been looking to buy in Aubeterre and had enquired about a particularly pretty house, only to be told it had just been sold. 

He bought something else but when he was next over he saw the same house in the agents window.  A few discrete enquiries with his neighbours revealed that it actually belonged to the cousin of the owner of the agency.  It's used to get people through the door where they can be shown other "legitimate" houses.

Gaelle, who is from Dijon, laughed out loud at this and said it's so common that the French even have a name for this:

"Le produit d'appel".

It made me chuckle too.... but I suspect that if you have spent time and money coming over to specifically view one of these non existent properties then you wouldn't be joining in quite so heartily.

www.cognacproperty.com 

Huge rise in interest for French property say Conti Financial Services

Research out this week from Conti, a financial services group, shows that France is extending its lead as the most popular place for UK property purchasers.

You can see their full press release here.

They say that France remains the top place for Britons buying properties overseas, accounting for twice as much interest as any other country.

The research also shows that 43% of the inquiries Conti had received so far this year had been about France, up from 31% in 2009.

Interest from potential British buyers has tripled during the past two years as people took advantage of reduced property prices and low interest rates.

It added that the French mortgage market was also very stable, due to the conservative approach adopted by the country's financial institutions in the past. Banks in the country are in a strong position to lend and many will still advance 100% of a property's value.

Of course there is a huge difference between making an enquiry and signing the Compromis de Vente but this research does make me a tad more optimistic about things for 2011.

Hopefully I will experience this demand first hand when I meet some of you at The France Show in a few months time.

www.cognacproperty.com

Autumn in the Charente

As usual I took the dog out for a walk this morning before settling down into my days work (have just been mandated to source a chateau & vineyard for some international clients so there's plenty to do).

It's been so nice lately that I keep meaning to take my camera - but old age is obviously setting in and each morning I let out a little curse as I enter the vines and realise that I have forgotten it again.

Until this morning.

I'll try and remember to take some more snaps when the viticulteurs begin picking the grapes but meanwhile I hope that this gives you a little taster as to the extraordinary and unspoilt beauty of this particular part of France.

www.cognacproperty.com

French house prices over the last 5 years

Regular readers will know that I'm of the firm opinion that there is no such thing as a useful "general" house price indices.

I believe that all data is made up of "micro" markets and to say that UK house prices fell by 25% or that French house prices rose by 7% is useful only for stimulating discussion around the dinner table or for generating headlines in the popular press.

So with that caveat in place I'd like to share with you some figures from the Notaires de France who calculate that for an old house (as opposed to say a new build apartment) countrywide prices have done the following:

2005/6   +14.2%
2006/7   +9.7%
2007/8   +5.4%
2008/9   -2%
2009/10  -6.3%

Vaguely interesting but where it gets (a little) useful is if you drill down into each department (I live in Charente within Poitou Charente) and you can see how local prices have fared.

You can do all this by clicking here.

The RICS seem to generate huge volumes of press coverage each month with their regular bulletins (lead story on the BBC yesterday, mass coverage in all the nationals) yet in France the Immoprix figures pass with only a fraction of the media frenzy across the channel.

Perhaps they should think about headhunting the RICS press officer to get things rolling.

www.cognacproperty.com

French property - so what exactly is a "buying agent"?

I set up my business in France in 2003 when you could literally count the number of buying agents on one hand.  As regular readers have probably guessed, I love my job and many of my clients have become friends.

Since then, thanks largely to tv shows on TF1 and M6, our number has increased and we even have our own national federation - http://www.fnci.fr/

I have delved into Wikipedia to help me explain what we do and you can see their definition here.  They are talking about the UK market but the principle remains the same.

They are people acting as agents on behalf of a buyer and not the seller, as do traditional estate agents whose job is to obtain the maximum price for a property for the seller. Buying agents represent the buyer's interests and normally undertake negotiations on their behalf to acquire a property for the best possible price and terms.

The main advantages of using a buying agent are the savings in time and money and access to properties not available on the open market. Whilst nearly all charge a registration fee (anything between £500 and £2500) and a percentage of the purchase price of the property (usually between 1.5% and 2% of the sale price) the agent’s negotiating skills and access to properties before they reach the open market often mean that clients purchase properties for substantially less than they would if they went to estate agents or vendors directly.

Couldn't have put it better myself. 

For info my fees are €500 then 2.75% and you are tapping in to over 25 years experience of the international property market.

Feel free to get in touch.

That's it...shameless plug over!

www.cognacproperty.com

French property portal hits the jackpot

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Angouleme - Circuit des Remparts 2010

There's only one week to go until the annual Circuit des Remparts in Angouleme.

Classic cars aren't really my cup of tea but having been in Le Mans by accident during the "classic" (not to be confused with the 24 hour race) earlier this summer I'm sure that it will be similar fun.

Angouleme is quite a lively place anyway and when you fill it with hordes of Terry Thomas look-a-likes and their WAG's it becomes even livelier.

The event takes place on September 17th, 18th and 19th but if you haven't booked your hotel yet I'd say that you'll probably need to stay outside the city centre as it gets pretty busy. 

Enjoy the show....

www.cognacproperty.com

Advance to Jarnac - do not pass go, do not collect £200

My youngest daughter is hooked on Monopoly and, aged nine, consistently bankrupts her sister, mother and (yes even with 25 years experience in the property industry and a tendency to purloin the odd £500 note when he's the banker) her father.

We were all playing last night and I had just been dealt the killer blow of picking up the "Advance to Park Lane" card - not good when the scruffy little urchin had a hotel on it and I had cash reserves of £36.

Having nothing better to do I then started discussing with the senior partner all of the towns & villages we have in the Charente and we agreed that Jarnac & Cognac should undoubtedly equate to the purple properties that denote the prime locations on the board.

(In fact, as you can see from the photo above, there is already a "Poitou Charente" version of Monopoly with Futuroscope in place of Mayfair).

We decided that Chez Downie we're going to make stickers of our own - if it ever gets to production stage I'll post a picture.

The tricky bit will be finding a couple of ropey locations to cover Whitechapel and the Old Kent Road and not letting any of the locals find out!

www.cognacproperty.com

Messing about on the Charente...

I took a hooky half day yesterday as I had been invited out on to the river by my good friend Andy.  We both have similar backgrounds in that we had reasonably successful careers back in the UK but moved to France to escape the rat race and enjoy life at a quieter pace.

We met up at the quayside in Bourg Charente, just outside the Michelin starred "La Ribaudiere" restaurant. I assumed that getting the boat from the trailer into the river and prepared for launching would be a complicated affair but before you could say Kenneth Grahame we were up & running and messing about on the river.

If you have never travelled along the Charente between Angouleme & Saintes I beg you to do so....it's a truly beautiful stretch and the locks are a pretty & pleasurable diversion rather than a chore.

Some of the houses are also quite stunning with a mix of brave modern architecture and traditional Charentaise masterpieces. They even put to shame some of the wonderful riverside properties in Henley & Weybridge that we knew so well.

Riverside property here is such wonderful value for money but it's rare that the better houses hit the open market - it really is a case of "local knowledge" winning out if you want to buy the best.

My favourite stretch was along the quayside in Cognac, we sailed majestically by the tourists who were hopping onto the Hennessy boat for their guided tour and it's only really from the middle of the river that you can appreciate the scale and beauty of the Otard chateau.

All in all a cracking day out and a gentle reminder to Andy & myself of how lucky we are to have jumped off the wheel and escaped the cage.

www.cognacproperty.com

Three tips to help you pay less for your property in France

I usually hate this type of post as I click on them in high anticipation and yet am nearly always disappointed with what I read.

Hopefully this won't be the case with you.

The obvious way to save money (6-7%) would be to try and find the house privately using one of the many online portals, adverts in local papers or the AV boards outside the house itself.

I'm not going to suggest this though as I feel you need to be fluent in French, living here full time and fully conversant with the laws and buying procedure before attempting it.  Over 50% of French purchasers buy privately but it's certainly not for the inexperienced. So:

Tip one: Make sure you collect as much "comparable evidence" as possible to help you negotiate on price.  Don't just look through one estate agent because they are "nice" or speak English.  You wouldn't do it at home and it means you can't possibly get a good handle on market values.  If you have done your homework and seen lots of houses that fit a similar brief (house size, location, condition and plot size) then you will be able to use this information to your advantage when discussing price with the owner.

Tip two: Find out how long the house has been on the market for, if the price has changed during this time and how house prices have changed in the area over the last year or two.  You can find answers to the first two by asking the owner/agent and you can find out answers to the third by looking online. The "Notaires de France" publish this information for houses, apartments and land and you can see the latest figures here.  Once armed with this info you should be able to shave a fair bit off the asking price in the window.

Tip three: Use a currency broker to transfer money across, not your bank.  I know it's easier to just ask your local bank to do it but you can save up to around 3% by using an FX broker.

It's easy to set up an account, you can forward purchase to avoid any nasty surprises and they will certainly save you money.  I have been using these guys since I moved to France as they have a "best rate" guarantee and are friendly & efficient.

That's it then...hope you found these three ideas useful. 

Of course, my number one tip would always be to instruct an experienced and regulated "buying agent" like myself.

But then I'm biased.....

www.cognacproperty.com

Negative equity spreads across the USA

There have been some shocking housing figures coming out of the US for a while but I have just read something that took my breath away.

23% (11 million) of all properties with mortgages are in negative equity at present and this rises to 28% if you include people with less than 5% equity in their houses.

Those numbers are staggering. 

I well remember being in negative equity during the early nineties and it was an incredibly gloomy period for my wife and I.

Fortunately we tightened our belts and managed to struggle through without losing our jobs and a few years later we came out of the other side unscathed.

The other thing to remember is that the subsequent years were good to us and we saw a substantial rise in value.

However, some of the regional US figures simply beggar belief and I fear for the homeowners. 

I have never been to Nevada or Arizona and beyond knowing that they're in the west I'd struggle to tell you much about them. 

What I do know however is that, according to this paper from Corelogic, 68% and 50% respectively of all the mortgaged properties in those states are "underwater".

Sixty eight percent....it's going to be a long old struggle for many of those people to hold on to their homes.

And when America sneezes....this report in the Daily Telegraph today about the UK housing market and the drop in mortgage lending doesn't make cheery reading either.

I certainly don't want to come across as being at all smug but at times like these it's very comforting to know that the French housing market has the reputation of being predictable and almost dull in its stability.

www.cognacproperty.com