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Credit Market Turmoil and Cote D'Azur Real Estate

Posted by ShayRyan-194769 - Created: 10 years ago
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10 replies (Showing replies: 1 to 10)

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Posted by Gorgonzola-232475 - 10 years ago

"There's no easy access to credit here." When I was there in 2003 I easily found a lender willing to bend over backwards to lend at an amazingly low rate.

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Posted by Gorgonzola-232475 - 10 years ago

Richard aka RasSpot on! I am really glad to see that someone knows (or is saying) what is going on. I am currently based in California and what is happening here is exactly as you describe it. Of course there is a wealth of market data freely available, and news reports abound which makes the task of tracking easier than I imagine it is in France. No point in me adding anything since I would just repeat what you've already very succinctly already. For the record though, I was looking for a house in the CDA because of the turmoil in the US. I very quickly realized that I was probably better off overall to stay put, in the middle of the most expensive, over-inflated real estate in the US. Renting is still by far the best deal out there.

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Posted by Markdo-187997 - 10 years ago

Some info here re. historical data from company with vested interests so the usual warnings apply:http://www.fnaim.fr/infos/lettre-de-conjoncture/

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Posted by ShayRyan-194769 - 10 years ago

I pretty much agree 100 % with what Ras has to say.

In terms of no easy access to credit here, that only applies if you are a french national/resident with no access to foreign capital markets.

I do agree that the CDA has great demand and little supply and that the credit market turmoil does not matter ultimately to the long term investor. Hwever, for someone ready to buy, it does make a difference at what point in the cycle you join the party.

Does anyone know of a source of data for historical sales data for the region ?.

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Posted by jivebaby-189615 - 10 years ago

I would attribute the "100%" appreciation to normal market dynamics -similar in fact to the UK but with room left on the upside. Nice is particularly well placed with the substantial improvements to city infrastructure nearing completion.

"The CDA more than most places is essentially driven by cash, especially when non-residents a looking for second homes," hence it if you are an investor on the Cda, here more than most places you must know your market and critically be in control of as many components as possible.

Waiting for uncertain market dynamics to “assist” the decision making process is a rose tinted way of relinquishing control, and a sure way to buy for more and to sell for less.

I am an ex-trader and market volatility typically represents an opportunity to make (or lose) more money.Spreads typically increase and those professional enough to remain objective and unemotional usually reap the benefits.

Mishkin (Federal Reserve Governor) said yesterday that the Fed should react immediately to the house price decline when they see it. He suggested this involved quicker and more aggressive interest rate cuts than those predicated by a standard policy rule, in which policy-makers respond only to deviations in output and inflation.Bernanke has a hard act to follow (Greenspan) and a failure to support or provide liquidity which is a key component of a “normal” market would make his objectives harder.I personally see most markets reaching new highs before Q2 next year and more likely before year end.

As Jane, another long term investor who retains control asks rhetorically "why are we worried?"We're not.

More specifically as a long term investor I much prefer markets to go down –it improves my price averaging, it enables me to negotiate better prices and to leverage my competitive edge.If the prices only ever rise it of course benefits a small minority but reduces transparency, usually to the detriment of those who can least afford to buy and making overall costs higher for the majority.

If prices drop substantially on the Cda, I amongst others in a very long queue would cheerfully buy more property.

The bottom line is that credit is a very small factor in this market, and that liquidity in terms of supply, demand and funding (usually in cash) are the critical components.

Far too many wannabe investors fall in love with (a) property to the idea of property in general, much as they do people, and emotions should never be confused with economics. The Cda is without doubt a glamorous location and definitely not a good place for beginners to learn business unless they have deep pockets.

I wish you good fortune and patience whether you are a buyer or a seller.


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Posted by Jane Fryer - 10 years ago

As a lover of this region and a landlady in Nice, why are we worrying. It's all about supply and demand. Properties will always increase and will always rent/sell because this is one of the most beautiful places in the world and one which also offers work. Busts are often short lived and after every bust is a boom. I have seen it happen in London many times. Supply and demand, my dears, supply and demand!!

Jane Fryer

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Posted by Ras-214972 - 10 years ago

I think when the superbonuses stop, and people lose money on (now worthless) investment funds that were invested in the credit bubble, that even the cash buyers will start to disappear. The restriction in credit effects everyone.

We have had the biggest inflation in the amount of money ever in the past few years and it cannot continue forever, it seems it is now showing signs of collapse. Recent events are not a mere "shock", the problems are deep and I suspect there are more to come.

Unfortunately, boom and bust is a natural part of the "business cycle", we've had (or still having) the boom, so at some stage we'll get the bust. However, the bust part of the cycle (when it eventually happens) is likely to last a few years. It is way too early to see any effect yet even if it has begun.

In my view, the assets that have gained most, have the most to lose, whatever they are and wherever they are. But prices are sticky on the way down, because sellers are always reluctant to admit the fact and property therefore goes unsold.

Therefore, the thing to watch for is the increase in the number of properties on the market (due to this and also 'forced' sellers), and estate agents becoming more keen to sell to you (as their turnover decreases). This is what you will see first, before actual real evidence of reduced prices is apparent (and that point, sentiment changes and a downturn speeds up).

In any case, you should make your own opinion, do your own research. Vast number of businesses, advisors, banks, estate agents etc all have a vested interest in perpetual increasing prices, so it is hard to make an accurate analysis.


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Posted by drummer_boy - 10 years ago

There is no easy access here to credit.

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Posted by ShayRyan-194769 - 10 years ago

so what would you attribute the 100% appreciation in the Cote D'Azur over the last 8 years ?, increase in cash buyers or increase in easy access to credit (low interest rates, no doc loans etc).

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Posted by jivebaby-189615 - 10 years ago

The CDA more than most places is driven by cash, especially when non-residents a looking for second homes.

People buy and live dreams on the Riviera so any effect you seen down here is likely to less than in urban residential areas that are driven more by economics than by emotion. Sure if the property market goes into a tailspin, yes things will slow down much as things were in late 2003.

The market factors in moves so that corrections are more widely broadcast in terms of near perfect distribution of information, meaning there are less surprises. Shocks that do hit the system invariably correct and bounce way before most fools have time to act nowadays. The pace of change in markets increases more or less exponentially so each one is faster than the other. The SPD scenario is well know which is why no professional banker was surprised when BCCI went down the tubes at that was many years ago. The pieces were picked up by fools looking for the extra 0.25% on short term rates.

Bottom line is that if you are looking to buy or sell, then try to do so on your own terms and at a time of your own choosing -you will invariably get a better deal and make a better decision than trying to second guess whether the DJ or FTSE will be plus or minus 5% in a weeks time.

An old market saying - that only fools and idiots try to hit the top and that "bottom" pickers get dirty fingers. No real professional would try and if by chance one does hit the top or bottom of a market short term it's simply written down to luck and most certainly not judgment.

I hope that you find this insight of interest and ultimately helpful.