It’s been an interesting couple of weeks since the last e-newsletter.  I attended the OPP Property Industry Awards dinner in London last week before flying to New York.  The ‘Big Apple’ didn’t disappoint, but the talk of the town and the media was the sub-prime meltdown.  The TV was filled with talk shows, documentaries and news items covering the personal tragedy that millions of families in the US are presently enduring.  Unfortunately, irrespective of Federal government initiatives, the carnage is set to continue for some time.

LIBOR

There are many commentators in the property industry looking for reductions in interest rates as the solution to the market turmoil.  Well, to a point.  The key factor is the rate at which banks lend to banks – called LIBOR in the UK.  As a large proportion of mortgages are in some way connected to LIBOR then this is the rate to watch and not necessarily base rates.  Add in the psychological impact of negative media coverage of the US and now the UK property markets and we are set for a bumpy ride, but a ride which will present outstanding opportunities to investors who know what they are doing.

Positive Cashflow

As ever, positive cashflow is the key to survival and prosperity in property markets.  Only last week I heard of buyers in Eastern Europe who had made over 100% “profit” – on paper - only to find when they sold that they made an actual loss given all of the transaction fees, negative cash flow and oversupply softening re-sale prices.  As some of these markets are now at the top of their cycles, I continue to warn the novice investor to think carefully about investing in a negative cash flow property with low capital growth prospects and large transaction fees.

Cyprus Property Prices Rocket

Property prices in Cyprus, as I predicted some time ago, are moving upwards rapidly.  The latest published index shows that prices have increased by 9% in the last 3 months – yes that’s right, in the last 3 months.  With entry into the Eurozone only 18 days away, we will see further strengthening in the market.  The significant rises have been in South Larnaca and Famagusta District, but as ever, micro as opposed to macro location has been the key success factor.

Grove Spa Resort

I have a limited number of units available in the popular Grove Spa Resort which are valued by a RICS surveyor at 12% below market value which I will sell on a first come first served basis.  The deposit required is only 10%.

If you wish to benefit from this strong rise in prices by investing below market value, then please e-mail me direct at dominic@jet-to-let-magazine.com

France and the leaseback scheme

I am off to France on Sunday with Henry Powell-Jones to complete the due diligence on a ski resort scheme we have been looking at for some time.  It is in a fantastic location in the Southern Alps and offers 19.6% cashback from the French government and a guaranteed rental (indexed linked) for up to 11 years with personal use of up to 8 weeks as part of the package.  Mortgages can be as high as 100%.  Leaseback schemes are well established in France and in some cases qualify for a SIPP in the UK.  We will be covering the leaseback scheme in detail in the next edition of Jet-to-Let Magazine which will be posted to your home or office on the 18th January 2008.  We have a limited number of units available for Jet-to-Let-Investments clients and we estimate that those properties will sell out at launch.

If you wish to express an interest in this scheme and request further information ahead of 18th January 2008, then please e-mail henry@jet-to-let-investments.com

The year is coming to a close and I hope it has been a huge success for you.  If not, then a period in the New Year for reflection is a must.  I will be reviewing my overall strategy during the first couple of weeks of 2008 and also re-publish my goals for 2007 which I sent by e-newsletter at the start of the year and examine how I got on.

We will be closing the office in Liverpool from 1pm on Wednesday 19th December until 9am on Thursday 3rd January 2008 so our hard-working team can take a well earned break.

I wish you and your family a very happy Christmas and prosperous and healthy New Year.

Latest Property Investment News

Tax cut as Irish housing market cools

Brian Cowen, the Irish finance minister, has moved to stimulate the country's housing market in his annual budget, cutting the tax paid on house sales in a bid to prevent a hard landing for the economy.

The move comes amid new evidence that house builders are slowing down their activities in the face of lower demand, as buyers hold off in anticipation that prices will fall further.

Prices fell a further 1.3 per cent in October, according to the latest figures from the Irish Life & Permanent TSB house price index. House prices in the 12 months to the end of October were down 4.7 per cent - with anecdotal evidence suggesting the price falls are much closer to 10 per cent in some areas of the country.

Construction has been a big driver of the Irish economy, accounting for 13 per cent of economic output.

However, the slowdown has seen bodies like the construction industry federation predicting that as many as 20,000 jobs could be lost.

Ireland built a record 88,000 houses in 2006, compared with 155,000 in England and Wales - a region with 13 times the population. House completions this year are expected to reach 80,000 but industry experts predict this could fall to 25,000 in the first half of 2008.

Housing demand has been fuelled by strong economic growth, with the economy at near full employment.

However, official growth forecasts have been progressively cut, with the central bank now predicting gross domestic product to increase by 3.5 per cent next year compared with a peak in 2000 of 11 per cent.

Eunan King, economist with NCB stockbrokers, believes underlying demand remains strong and points out that half the 70,000 new jobs created in the past 12 months have been taken by immigrants from eastern and central Europe, all of whom need to be housed.

The tax moves announced yesterday cut the tax on house sales from a flat 9 per cent to 7 per cent for houses under €1m ($680,000, £485,000), which is the great bulk of houses in Ireland.

Mr Cowen described his move as a "step change" in the operation of the tax system on residential property.

He claimed the tax changes were "extremely simple and considerably less expensive for both buyers and sellers". The tax moves were "highly progressive" as "those buying the more expensive houses will always pay a higher effective rate than those buying your average house".

Source: FT.com