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Despite the current financial turbulence, investors should now be looking beyond negative headlines to the opportunities offered in a buyers' market, writes property journalist Laura Henderson.
The past week's brush with systemic financial failure has delivered a nuclear wake-up call to every investor. The effective 'nationalisation' of British clearing banks, the eleventh hour $700 billion bail-out of the US economy and the threat of bankruptcy faced by Iceland are all explicit proof of meltdown in large parts of the global financial system.
Investors are now faced with one of two options: follow the panicked crowds through the asset exit doors or adopt a counter-crunch mentality and seek out those markets genuinely weathering the storm.
There is no question that the broader psyche of the property market has taken a battering in recent months, many, including myself, would say undeservedly so. One major bone of contention is the frequent and wide scale misuse of 'price-plunge' data for sound bite purposes. The negative repercussions are plain to see.
Without access to considered interpretations of statistics, property investors are destined to miss out on genuine opportunities. Take the US as an example. Contrary to widespread popular sentiment, not every neighbourhood is suffering from free-falling house prices. There are property pockets for which the 50% house price declines in 'bubble states' like California and Arizona, are little more than headline fodder. Washington, the Carolinas, and New England, and even parts of Florida seem cushioned from the sub-prime contagion.
A classic case is Vero Beach on Florida's Gold Coast. Ranked number two in the top ten cities to buy in by CNNMoney.com, prices are holding firm because income per capita is gaining on that of neighbouring Palm Beach, the state's richest county. It attracts those trading up as well as buyers trading down. Sellers may not be seeing the previous heady gains, but entry-level prices for deluxe waterfront homes at $500,000 continue to generate a steady flow of enquiries, particularly high quality developments underwritten by big brand developers.
Closer to home in France, public panic, despite the spectre of recession looming, is not en vogue. True, house prices are not soaring and credit is increasingly difficult to acquire, but its banking system is in better shape than most without any hint of the risky sub-prime lending that has caused so much turmoil elsewhere.
Lower interest rates and government sweeteners pledged by President Nicolas Sarkozy such as offsetting mortgage costs against income tax and changes to inheritance tax are also helping to sustain interest.
Throw in the current green tinged wisdom that rail travel trumps airlines and you will understand the re-adjustment of house prices in certain Paris districts. International business travellers and euro-commuters are sold on the prospect of bagging a pied a terre bargain in rapidly gentrifying districts like the 10th. Capital appreciation in this neighbourhood reached 12% in 2007, with property prices averaging €7,000 per square metre compared to high-end favourites such as St Germain des Pres and Luxembourg at €15,000 and €18,000 in London's West End.
Nervousness and uncertainty may be the dominant characteristics currently grabbing the property market headlines. However, solid research and a medium-to-long-term outlook remain the reliable strategies for investment success.
The winners in the financial meltdown will not be those running with the pack. Success will come to buyers looking beyond the negative hype and seeking opportunities in the areas that continue to offer attractive homes for their cash. In short, it's not enough to hold a winning hand these days. You also need to know how to play it.