28 Aug 2006

The Shutters of Old Nice

Nice is famous for its shutters. They form an integral part of the streetscape in the old parts of town, as they do across much of southern France, but in Nice the intensity of the Mediterranean light plus the combination of the pastel shutter shades with the earthy wall colours makes for a quite stunning spectacle. Consequently, the shutters appear on the cover of guidebooks and in countless postcards and have become icons in their own right.

The shutters aren’t just for show. They are immensely practical and are a good example of what we once called appropriate technology, essentially a low-tech solution to a problem, in this instance how to keep cool in a hot climate. The Brinkleys have just spent a week in the apartment I part-own in Nice and, once we mastered just how to get the best out of the shutters, the rooms stayed cool and fresh all day and all night, despite the daytime temperatures peaking in the 30s.

The apartment has a high-tech Daikin air conditioning system and for the first couple of days we played with it incessantly, trying to get it to work perfectly. But air conditioning can be, and often is, frustrating to live with. To get it to work well, you have to close all the windows, but if you then leave it on for a long time, it is easy for the air temperature to drop too low. If you leave it on in your bedroom whilst you sleep, you risk waking up two hours later freezing cold. Even if you manage to get the temperature right — and there are temperature adjustments you can make on the handsets — it is still just a little too noisy to make sleeping easy and, additionally, the air quality isn’t that great because its being recirculated. You keep wanting to throw the windows open to get some fresh air, but of course that defeats the logic of air conditioning.

By Day Three, we had worked out how to get comfortable at night without any air conditioning, just by using the shutters. The shutters have three modes, as illustrated by my photo here, taken from the rear of the apartment.

Open: lets the light flood in. This also harvests solar energy and heats the apartment in spring and autumn. In the heat of August, this didn’t concern us.
Closed: keeps the sun out in the heat of the day, provides privacy and blocks out enough light to enable sleep. In addition, a metal hook locks the shutters into the closed position and thus provides security.
Closed but with bottom flap open: keeps the hot sun out during the day but maximises ventilation.

The trick we learned was to open all the windows and close all the shutters during the night. Additionally, the internal doors had to be left open. This created a controlled flow of air from front to back, enough to keep the apartment cool and fresh throughout the night. No night sweats and no freezing butts, just hours of uninterrupted sleep. In the morning, the fresh bread smells from the bakery downstairs wafted up into the apartment. Bliss.

I can’t say for sure, but I believe that most of the older Nice apartments have been built this way, designed to use the shutters to control ventilation in this fashion. My guess is that this natural form of air conditioning would suffice in all but the most extreme heat waves.

6 Aug 2006

House Price Crash?

This blog is currently being featured on an interesting website called House Price Crash. To me, it’s interesting that there even exists such a website, more so that it’s a very popular spot. Do these people want house prices to crash so that they can afford to buy one? Or are they warning existing home owners of nightmare times ahead? I don’t know, and I can’t say, but they have assembled a lot of statistics to show that house prices are very toppy.

I have been bearish on UK house prices for so long that I have almost forgotten to be bearish about them anymore. I was badly affected by the slump at the end of the 80s although in hindsight it changed my life for the better. As a direct result of the slump, I migrated from being a builder to being a writer about building. I started writing a guidebook to building homes, which is what I knew about, because a) there wasn’t any money to make out of building and developing in 1993 and b) because no one else had ever done it before and I sensed a market opening.

As my writing career took off, I put thoughts of getting back into developing on the back burner and by the time I started thinking about it seriously again, in Y2K, I was already convinced that house prices were too high. Since then, they have marched relentlessly upwards and the latest news is that they seem to be on the rise yet again, which may have been instrumental in getting the MPC to raise rates by a quarter of a percent last week.

There are good structural reasons for house prices to rise. The housing stock is increasing but only very slowly. We have the lowest rate of new housebuilding per head of population in the Western World. Incomes are rising. The City has been a phenomenal growth centre for the past twenty years and London has consequently become one of the world’s great honeypots. The population is also rising, with large numbers of immigrants pitching up on our shores. People want to live here, particularly in London and the surrounding counties. And if demand is high and getting higher and supply is restricted, you have a recipe for rising prices. Add to this, relaxed lending from the banks and the relatively low-interest rates we have enjoyed for many years: consequently, we are happier with huge dollops of debt, far more so than at any time in history. These are the bull points.

Against this is the feeling that something has to give. Or, in the immortal words of Jim Morrison, “I’ve been up so Goddam long that it looks like down to me.” What would it actually take to upset the applecart? One thing it won’t be is an increase in the rate of housebuilding. Any increase from our current dismal levels will be far too little, far too late and new housing will, in any event, probably fill up with immigrants long before it has a noticeable effect on prices.

However, a meltdown in the City is a real possibility. The share crash of 1987 was at least a contributory cause of the house price crash of 1989. It could happen again, although share prices are in truth currently not nearly as high as house prices. But if the Middle East gets worse and oil supplies become difficult, then it would cause a global financial meltdown. And that would ripple out to house prices, as jobs are lost, bonuses vanish and top-of-the-range London property stops selling.

Another possibility is a prolonged terrorist assault on London, large enough to dent confidence in London as a financial centre. It’s a distinct and terrifying prospect, although perversely it might just increase demand for properties in quieter neighbourhoods. The IRA tried to do it and managed to get through the steel cordon a few times but not enough to really disable the City. However, the use of suicide bombers is a new kind of threat that is much harder to design out. I guess it all depends on whether the tube bombings last July remain an isolated act of terrorism or just the beginning of a long campaign.

Finally, there is the prospect of the bubble bursting spontaneously. It happens more frequently with shares than it does with housing but happen it does. All bubbles are based on the availability of lots of cheap credit, and the UK mortgage market is certainly guilty of that at the moment. The justification for borrowing is simple: the assets you are borrowing against are rising in price by more than the cost of the money. Everybody knows that this can’t go on forever but it can go on for a hell of a long time and predicting the point where it stops is impossible. Sometimes it’s triggered by higher interest rates, sometimes it isn’t.

By way of example, remember back to the Dot Com boom at the end of the 90s. It was a classic bubble, and many people were saying as much at the time. But why exactly did it end when it did? I have yet to read a convincing answer to that one. The valuations placed on invoice-less companies coming to market was already ridiculous a full two years before the bubble burst, so it was hardly a case of the share sellers peddling over optimistic scenarios.

So it may be with UK house prices. There may just come a point when people say “Enough is enough, I am not paying that ridiculous price for a pile of rubbish anymore.” Some people have been saying this for a while. But not enough to change a market. And whilst I have been expecting the prevailing bullish wind to change for many years, the value of our house has trebled since we moved in 14 years ago. Right now, a house price crash seems a remote possibility.

3 Aug 2006

The Windy Nimbies: tilting at windfarms

If you are a fan of bizarre arguments, you’ll enjoy the cut and thrust of living in the lee of a proposed windfarm. I’ve long marvelled at the little wayside posters that spring up across the countryside to protest at some new wind turbine “bigger than Big Ben.” But it wasn’t until the windfarm business, Renewable Energy Systems, chose the next door parish to plonk a 13-turbine monster that I become aware of what a strange bunch the Windy Nimbies actually are.

I am really not that bothered what goes on in the countryside around me. It’s intensively farmed with cereals and lots of oilseed rape, which stinks the place out in April and May every year and makes most of us quite nauseous. We already have a line of huge pylons marching across the parish, so we are not exactly strangers to the concept of tall steel structures. The landscape is well-managed, for sure, but it is managed largely for the shooting of birds, which isn’t a pastime I care about. As a result, we certainly don’t have open access to the countryside and I certainly don’t feel precious about it in any way. If they want to put up a windfarm, good luck to them. Compared to what we already have, wind turbines seem pretty benign to me.

But that is not how the Windy Nimbies see things. No, they see each and every windfarm as a gross act of environmental vandalism. Their anti-windfarm campaign goes straight for the jugular, which in the countryside mean one thing. House prices. They announce in their newsletter that house prices fall by 20% in communities blighted by windfarms. It’s an extraordinary claim, the basis of which is an “authoritative” report by the RICS (Royal Institute of Chartered Surveyors). However, if you read the report it says nothing of the sort. It was based on a survey of RICS members around the country and it asked them what, if any, effect windfarms had on house prices. Around 40% of respondents reported no detectable change, whilst the other 60% noticed a dip in prices when a windfarm proposal first surfaces, followed by a recovery once the windfarm is up and running and people realise it was all a fuss about nothing. No mention of any percentages anywhere. So where does this 20% figure come from? Certainly not from around here where the housing market remains as strong as ever.

The Windy Nimbies then go on to claim that this site (like every other site in England, no doubt) doesn’t have enough wind to sustain a wind turbine, let alone 13. Then they suggest that the windfarmers will be making vast profits from the development. If it’s the wrong location with too little wind, why have the windfarmers chosen it? And how will they make these vast profits?

Ah, they say, it’s all down to subsidies, “paid for by you and me.” Only problem here is that renewable energy doesn’t get any subsidies (unlike the owners of the “precious farmland” that they are about to “desecrate”). The economics of renewable energy work by the government forcing electricity suppliers to buy ever-increasing amounts of the stuff. Renewables are purchased at auction and the demand is kept high so as to encourage more producers to come on stream. It’s a neat ruse and it doesn’t cost the government anything. You could argue that as a consequence of this market rigging, we are paying a too much for our electricity and that the renewables obligation is a hidden subsidy. But you could counter argue that in reality we aren’t paying nearly enough for electricity emanating from gas and coal burning and that, compared to the taxes on petrol and diesel, electricity gets taxed amazingly lightly.

But their strangest argument concerns nuclear power. The Windy Nimbies claim to be “deeply concerned” about global warming, only to dismiss wind power as being ineffectual. Apparently both David Bellamy and James Lovelock, two odd-ball environmentalists, argue this point and their thoughts are trotted out as if to suggest that the whole green movement is against inland windfarms. Lovelock in particular argues that we should be building new nukes instead of wind turbines. It’s a cogent argument and maybe he is right. But do you really think they would be rejoicing if a nuclear power plant was being proposed two miles away? I don’t think so.

The next line of attack is to dish the dirt on the applicants. It turns out that the parent company behind Renewable Energy System, the Sir Robert McAlpine Group, has been carrying out work on some of Britain’s nuclear power stations. Hmm. So they aren’t as virtuous and green as they would have us all believe from their glossy brochures. However, the Windy Nimbies have already pulled the rug out from under their own feet on this one by having suggested that nuclear power is the future and is the sensible way to confront global warming.

So in summary, their case against the windfarm is that it will make too much money from too little wind, that it’s being built by a wicked private company secretly involved with our nuclear power programme, and that everyone knows that windfarms are too little, too late and that nuclear is the answer. Oh, and the value of my house is about to collapse.

And they want me to be frightened.

Which of course I am. Not by the prospect of large wind turbines pitching up on my doorstep, but by the knowledge that so many seemingly sensible people who live around here can get spooked by them.