Archive for January, 2007

31 January, 2007 | No comments

House price rises slow down as rate increases take hold

House prices rose at their slowest pace since May this month as rising interest rates began to have an impact, new figures showed.

The Nationwide reported yesterday that prices increased by a modest 0.3 per cent in January, compared with rises of 1.4 per cent in November 2006 and 1.2 per cent in December 2006.

Analysts said that the Bank of Englands three interest-rate rises since August, coupled with fears of further increases this year, were beginning to cool the market.

The last interest-rate rise was at the beginning of January, when the Bank of England pushed rates up to 5.25 per cent a five-year high.

The impression of a cooling market was confirmed by weakness in the number of mortgage approvals for house purchase, which dropped to 113,000 in December from a three-year high of 129,000 the month before, official data from the Bank showed.

Geoffrey Dicks, of RBS Financial Markets, said: The approvals data . . . suggest that, even before Januarys surprise move, the previous (August and November) hikes were beginning to bite.

However, the figures indicate that despite cooling, the market remains strong. Mortgage lending rose to 10.6 billion in December, an 11.5 per cent increase on the same month a year ago and a record in cash terms.

Kelvin Davidson, of Capital Economics, said that the approvals data marked a genuine shift in sentiment among buyers in response to higher rates. We continue to expect a marked cooling in activity levels and house price growth over the course of 2007, he said.

Consumer demand for unsecured debt remained subdued, the Banks data revealed. Consumer credit rose by 1 billion in December, in line with expectations. Additional figures showed that M4, a measure of the broad money supply, grew by an unrevised 12.8 per cent in the year to December.

The figures will help to underpin the case for higher rates for some members of the Banks Monetary Policy Committee when they next meet.

Howard Archer, of Global Insight, said: There are increasing tentative signs in the latest mortgage data and survey evidence that housing market activity has peaked and it could be that the cumulative 75 basis points increase in interest rates enacted so far since last August is starting to weigh down on the housing market.

31 January, 2007 | No comments

Consumer confidence remains rigid

British consumers remain surprisingly positive about their own personal prospects, even though they are gloomy about the outlook for the economy, according to the January GfK/NOP confidence survey.

This looks good news for retailers but frustrating for the Bank of England, which pushed through a surprise rise in interest rates at the start of the month in the wake of a strong uptrend in retail sales.

The overall confidence index is still minus 7, a modest improvement from minus 8 in December, but City analysts had expected a move in the opposite direction.

Most of this negativity is about consumers view of the economic situation in general. Prospects for the economy over the next year rate minus 20, the worst since September, just after the first of the three recent Bank Rate increases.

On personal finances, there is a different story. The latest verdict on the past 12 months is minus 3, two points worse than a month ago.

But the next 12 months still rates plus 9, only two points down from December. As usual in the January sales month, people were looking to buy big-ticket items.

One crumb of comfort for the Bank is that the index of “now is a good time to save” rates a positive 34, the highest since September. But there is nothing here to suggest that consumers are likely to lock up their wallets and purses so long as there are plenty of jobs to be had.

The latest mortgage figures show record borrowing for house purchases but a relatively sharp fall in mortgage approvals. Heavy seasonal effects may have played a part but if anything is to give in the short term, it looks most likely to be in the housing market.

31 January, 2007 | No comments

Ski property: Canada

Owning a ski property for most Britons means looking at the Alps or possibly Bulgaria, but there is one classic location that is fast becoming a new favourite with buyers: Canada.

The country has a string of high quality, award-winning resorts such as Whistler and Mont Tremblant, with properties ranging from ski apartments at about 70,000 to luxury chalets hitting seven figures. Other resorts such as Banff and Jasper are in large national parks, so skiers share the area with the wildlife of the Rockies. And because of Canada’s top-class road system, most resorts are usually no more than two hours’ drive away from a town.

The Canadian ski season lasts from November until June (longer still in Whistler, where it is usual to ski through the summer months) so it is much longer than the European equivalent, and several resorts have snow-making equipment to ensure year-round activities.

Chartered airlines such as Canadian Affair, Zoom and Air Transat are now offering low-cost flights to major hubs such as Vancouver and Calgary - sometimes for just 70 one-way - so the Canadian ski resorts are fast opening up to the British market.

With lower property prices than in the French Alps in particular, longer seasons and larger ski homes than almost anywhere in Europe - therefore accommodating more people - Canadian properties are a sharp investment, too, for those who want to combine a holiday home with earning an income.

“House price growth in Canada hit 11.2 per cent at the end of 2006, creating strong prospective capital gains as well as a burgeoning rental market as Canadian ski resorts become more accessible to European tourists,” says Martin Sadler of Assetz Canada, a ski property estate agency and finance consultancy.

Canada has an interest base rate of 6 per cent and with mortgages available at 0.85 per cent or more below this rate, investors can expect rates as low as 5.15 per cent. Even as a non-resident of Canada, mortgages are available for at least 65 per cent of the purchase price of a property.

“The number of people going to Canada to ski has consistently increased over the past decade. Canada is a stable country with a great standard of living. Buyers are investing because in just a few more hours than a European flight, they can be at their own large log home purchased for the same price as an apartment in the Alps,” says Sean Collins, managing director of Pure International, a UK estate agent selling ski homes around the world.

“Snow is guaranteed, the standard of skiing is high and the number of other snow and year-round sports available is just vast,” he says.

To prove the point, one of Canada’s most popular ski destinations, Mont Tremblant - voted the number one ski resort in the eastern region of North America for eight years by the US’s Ski Magazine - has 100km of cross-country ski trails, a frozen cliff face for ice climbing, an 18-acre snow park with ramps, modules, jumps and a 130-metre long and six metre high half-pipe for extreme sports fans.

For ski purists the resort, which is about 90 minutes by car north of Montreal, boasts 94 marked downhill trails, 13 ski lifts and 13 chairlifts and gondolas shifting over 27,000 skiers per hour at peak times.

Mt Tremblant has expanded vastly over the years - tourist numbers have grown from 700,000 in 1996 to 2.5 million in 2006 - and there are now several new property schemes being built and marketed simultaneously.

Lesa River de Sanctuire has three-bedroom semi-detached properties with 1,200sq ft of interior space starting at 160,000 and going up to 185,000, while larger units with 2,160-sq ft go for up to 500,000, all with local golf club membership thrown in. Close by is Blueberry Lake, where 204,000 will get you a 1,250-square foot three-bedroom house and 365,000 buys a 2,950 sq ft five-bedroom property. Both have 7 per cent net rental guarantees for a year, too, through Pure International.

If you feel more adventurous you can buy a plot of land at Lac Desmarais on the Mt Tremblant resort - close to a property owned by Catherine Zeta Jones and Michael Douglas - and then build your own home. Some 1.5-acre plots have lakeside views, too, although these will be well above the base price of just 167,000 (again through Pure International).

If you are looking for a lower priced Canadian ski investment property, there is a more European-style complex of dense apartments at Fernie Grande in British Columbia, with prices starting from just 67,000 for a 400 sq ft studio including a furniture package, through Assetz Canada. Your property is automatically part of a scheme-wide rental pool. You may use it personally as little or as much as you wish. On the remaining days, your rental return is based on a proportion of the rent income for the rest of the scheme.

But although most Canadian ski resorts are well-regarded, there are some complaints about others mainly because of their size. Ski resorts in Canada are measured in their thousands of homes, because of the sheer size of the landscape and the potential for building. But occasionally developers find resistance from buyers.

The huge Three Sisters Mountain Village, 90 minutes from Calgary, for example, is beginning to sell the first phases of 4,000 new flats and houses in what will be Canada’s second-largest scheme after Whistler. But some visitors say the properties built so far are too dense and are simply too close together.

In some cases the ski infrastructure is too small to support the massive number of skiers - at Mt Tremblant, for example, 40-minute waits by ski lifts are not unusual at peak season, which north American skiers in particular regard as too long.

But these are minor quibbles in what is broadly regarded as a keenly priced market with good returns for investors as well as consistently excellent skiing for enthusiasts.

With European resorts increasingly expensive to buy into, and this year’s snow disappointing, things may well be looking up for Canada’s ski developers.

Savills: 020-7016 3740

Pure Internationa: 020-7331 4500

Assetz Canada: 0845 430 0020

31 January, 2007 | No comments

So you want ski property?

Ski properties may not be the cheapest overseas investments but many offer year-round rental income, so you can begin to make some of your money back. From Bulgaria to Canada, the French Alps to Austria and Switzerland, here’s a selection of wild winter retreats…

Sun and snow in Austria

Property: New chalets in Stadl, Austria

Price: From €175,988 (125,000) for a three-bedroom chalet

Agent: Investors in Property: 020-8905 5511; http://www.investorsinproperty.com

Agent’s details: These new chalets are being built in the village of Stadl, which lies where the provinces of Salzburg, Styria and Carinthia meet. The region is known for its many lakes as well as the majestic Hohe Tauern mountain range. It boasts some of Austria’s most sure skiing yet also has over 200 days of sunshine a year. Built to your specification in a rustic style, the chalets come fully furnished and share a swimming pool and solarium. All chalets have open-plan living areas, dining room and kitchen and outside terrace and garden.

Ski location rating: Turracher and Kreischberg are on your doorstep giving you access to 70km of skiing.

Tasty Blueberry log homes

Property: Blueberry Lake, Mont Tremblant, Canada

Price: Three- to five-bedroom lodges from 190,000 to 330,000.

Agent: Pure International Property: 020-7331 4500;

Agent’s details: Situated in the heart of Mont Tremblant, Blueberry Lake is a 300-acre scheme providing handcrafted luxury log homes. Owners can enjoy 14km of hiking, walking and cross-country skiing trails around the private lake, with direct access to a further 55,000km of snowmobile trails. The development will include floodlit tennis courts, swimming pools, online concierge service and high specification interiors. Just 90 minutes from Montreal, the development is a great base to enjoy the area’s natural beauty. The developer is offering a rental guarantee of seven per cent for the first year with projected returns for the second year onwards predicted to be around 10 to 12 per cent.

Ski location rating: Just minutes from Mont Tremblant, which boasts 94 runs on 660 acres with a longest run of six kilometres (see also page XII).

A piece of Alpine history

Property: Restored Alpine chalet near Courchevel, France

Price: €2.45m (1.75m) guide price

Agent: Knight Frank: 020-7629 8171; http://www.knightfrank.com

Agent’s details: This beautiful and lovingly restored chalet has breathtaking views and is set over three floors. Internally there are two reception rooms, four bedrooms and four bathrooms, some ensuite, and there is also a private entrance and garage, which has a wine cellar and cupboards. There is a large kitchen and a wooden terrace surrounding the house, which is perfect for outside dining. The chalet is being sold fully furnished and would make the perfect Alpine retreat. It lies in a great location within a few hours’ drive of both Geneva and Lyon airports giving you access to the rest of Europe. The busy village of Meribel is also within easy reach.

Ski location rating: The chalet is a short drive from Courchevel 1300, Le Praz, giving you access to the slopes of Courchevel 1850 and the Trois Vallees.

Great views in Bulgaria

Property: Cedar Heights, Pamporovo, Bulgaria

Price: From €59,850 (41,000) for a one-bedroom, one-bathroom apartment and €78,563 (54,000) for a two-bedroom, two-bathroom apartment.

Agent: Bulgarian Dreams: 020-7614 1240;

Agent’s details: Dramatically located on a sweeping hillside surrounded by virgin pine forest on three sides, the new development of Cedar Heights offers a selection of one- and two-bedroom apartments. On-site facilities include a restaurant, bar and coffee shop, and a spa centre with a large glass frontage on three sides. The properties enjoy panoramic views across the Rhodopi Mountains and access to the excellent piste of Pamporovo nearby.

Ski location rating: The extensive piste and lift system of Pamporovo are less than 400 metres away.

Take the waters before taking to the slopes in Switzerland

Property: Les Naturelles, Leukerbad, Valais, Switzerland

Price: From around 133,047

Agent: Overseas Homesearch: 0800 6520 769; http://www.overseashomesearch.co.uk

Agent’s details: Just two hours from Geneva airport and set in spectacular surroundings, Les Naturelles offers an opportunity to buy a mountain retreat in a spa town where travellers have journeyed for centuries to take to the waters and enjoy the clean mountain air. Famed for having Europe’s largest Alpine hot springs, the two spa facilities in Leukerbad are within a few minutes walk. A selection of one-bedroom apartments is available for immediate occupation and the developer is also offering a five-year guaranteed rental income. The properties escape the recent moratorium on foreign purchases in some Swiss resorts (see page V).

Ski location rating: Two gondolas whisk skiers to the top of the mountain’s challenging slopes.

Property: Residence Lautrec, Evolиne, Switzerland

Price: From SFr595,000 (244,000)

Agent: Erna Low Property 020-7590 1624; http://www.ernalowproperty.co.uk

Agent’s details: Outside the area where the Swiss Authorities recently restricted foreigners from buying (see page V), this is a small development of just six three-bedroom apartments within a traditional Alpine chalet building in the village of Evolиne in the Valais. As well as skiing, this charming resort has 100km of mountain bike trails nearby. The apartments are spacious, measuring an average of around 123 sq m. Around an hour-and-a-half from Geneva. Though a quaint scenic village, owners are within easy reach of some great skiing and activities the area has to offer. .

Ski location rating: Over 250km of ski paths and trails are just a short drive away including the Dent Blanche and, for those who prefer cross-country, two of the Central Valais’ best circuits.

Quaint, scenic and traditional

1,200ft high and rising in value

Property: Wyndham Cap, Quebec, Canada

Price: 108,000 for a one-bedroom property up to 248,500 for four or more bedrooms

Agent: IMOINVEST: 020-7345 0700; http://www.imoinvest.com

Agent’s details: Located at the summit of Mont-Plaisant at an altitude of 1,200ft, this condo hotel development contains a selection of one-, two-, three-, four- and five-bedroomed furnished homes. All properties are spacious and are in elevated settings offering glorious mountain and lake views. Each unit has a stone fireplace and large balcony or terrace and on-site amenities include the region’s largest swimming pool, spas, skiing, hiking, massage centre, tennis courts, restaurants and bars. The development has spectacular views over the old village of Mont Tremblant and will ultimately contain 400 mountain homes set within 200 acres of countryside.

Ski location rating: Within sight of a ski resort which has been voted best ski resort in Eastern North America for eight years, all properties are expected to produce strong rental income.

A rare taste of Savoyard chic

Property: Balcons de Megиve, the Alps, France

Price: 1,100,000 to 1,600,000 Agent: Savills International: 020-7016 3740; http://www.alpinehomesintl.com

Agent’s details: Less than an hour from Geneva lies this exclusive ski-in, ski-out chalet apartment development in the heart of one of the prettiest and chicest resorts in the French Alps. The building has been designed in typical Savoyard style. All apartments face south-west with up to 1437sq m of space. As well as being a great location for traditional skiing and snowboarding, other winter activities include snow polo, helicopter skiing and tobogganing trails. Megиve is also an active summer resort with summer sledging, swimming pools and riding, and is home to one of the world’s best spas. The favoured resort of Johnny Halliday and Brigitte Bardot in the 1950s and 1960s, influential families such as Citroлn, Taittinger, and Benetton still visit regularly. Ski location rating: Ski in, ski out properties on the smart slopes of Megиve, which boasts over 450km of slopes, are a rare find.

31 January, 2007 | No comments

The Mortgage Clinic: ‘Should I switch to an interest-only deal?’

“I’m mortgaged to the hilt, and recent rises mean I’m feeling the pinch. I am tempted to switch to an interest-only deal, though I know that if I don’t get an endowment I won’t be able to pay it off. But can’t I just sell up at that point, when the children have left, and use the equity I’ve built up to buy somewhere smaller?”

SG, Crouch End, London

Lots of people are thinking about switching to an interest-only mortgage - but don’t confuse the issue of endowments with the broader issue of whether to opt for an interest-only or repayment mortgage.

Endowments have come in for criticism, much of it justified. But an endowment policy is just one way of paying back a mortgage; others include mortgages linked to ISAs and other investments, or even your pension.

Equally, it is possible to have no formal way to repay the mortgage: many people now rely on bonuses, occasional overpayments from spare cash, an inheritance, or the sale of the property. All these can work, but you need to be very realistic.

At mortgage advisers Savills Private Finance, associate director Melanie Bien says the plan could succeed - depending on several factors. “The first is that the children move out in good time to enable you to sell up and downsize,” she says. “The second is that you will actually want to do this. You might like the family home so much that you want to stay on there. The third is that property prices won’t rise enough to cover the cost of the outstanding capital and a new home.”

So it makes sense to have a back-up plan. Making occasional overpayments, using a flexible mortgage, will pay back some capital and cut your total interest bill. Alternatively, you could pay money into a high-interest savings account.

You might want to think about starting mortgage repayments again later, perhaps if a higher salary allows it. It will take rather higher payments to cover the interest-only years but at least you stand to own the property outright in the end.

Bien also suggests looking at fixed-rate mortgages. This lets you plan ahead, because you know exactly what your outgoings will be. There are long-term fixed rates on offer that can last the life of the mortgage.

It could be a mistake to look at your mortgage options in isolation. Your ability to pay back the loan is closely linked to your overall financial position. Discussing your options with both a mortgage broker and a good independent financial adviser should help.

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