FLORIDA’S attractions are obvious. Disneyland and the other theme parks, plus glamorous Miami Beach on the east coast; Sarasota, Marco Island and the islands of Sanibel and Captiva on the west coast. The dollar’s new lows — the exchange rate is now $2 — only serves to increase these attractions to British buyers. But does the current condition of the property market in Florida and the whole of the US mean that an investment now makes sense?

House prices are down 4 per cent across Florida state in the year to March, while growth in the value of condominiums (apartments) is stuck at 2 per cent. The Daytona Beach, Fort Myer and Pensacola areas have suffered falls of considerably more than 20 per cent in a year. This, coupled with an oversupply of property on the market and a shortage of sales as buyers await a potential reduction in state property taxes before committing, has led to widespread concern that prices have farther to fall.

The only bright spot, as with elsewhere in the US, is in superluxury homes, which remain appealing to Wall Street millionaires and cash-rich Europeans. With Florida expected to feel the affects of the property downturn most acutely, buyers after capital returns would be advised to watch the market closely for signs, yet to emerge, that the bottom has been reached.

There are still purchasers who want a holiday home in the sun and certainly there is no shortage of property available across the region, with anxious sellers increasingly settling for lower offers. But even those buyers who are unconcerned about the risk of the value of their investment falling should note that the running costs of a villa with a pool can be high, which may present problems if the exchange rate recovers. “The upkeep can seriously dent any rental income, and you must factor in the weekly cost of maintenance such as cleaning the pool and cutting the grass,” says Garry Kenny, of Coldwell Banker Team Realty’s branch in Davenport, near Orlando. The Florida building boom of the past five years has resulted in many rivals for tourist income, should you need to rent out your holiday property.

Kenny believes that condominiums, which have underperformed houses over the past two years, are a better bet because running costs are lower. He believes that his venture, Tuscana, at Champions Gate, in Polk County, southeast of Orlando, will appeal to British buyers who like Mediterranean-style resorts. Expect to pay $360,000 for a furnished, two-bedroom condominium, on which rents would be $99 to $185 nightly. Martin Harwood, 44, and his wife, Jackie, who have two sons, Greg, 16, and Ashley, 12, bought a third property in Florida recently, a three-bed condominium at Tuscana, after selling the other two. Martin says: “As a family with children, it’s a much better choice than Spain. The all-year weather, countless attractions and shops keep you occupied and we believe the long-term investment potential is still good.” www.tuscana.net

AMERICANS LOVE A BIT OF CANDY

DONALD TRUMP, the high priest of the US luxury market, went dangerously close to the wall in the early 1990s property slump, but he is sleeping easy this time round. Appetite for the superluxury homes on which he built an empire persists in cities such as New York, Chicago and Los Angeles, and with plenty of entrepreneurial wealth to pay for it, prices are rising even as the mainstream market falls. Now the Candy brothers are spreading their reach abroad, with the $500 million (£250 million) acquisition of a former department store in Beverly Hills. It’s a vast jump from the $33.5 million that the site cost three years ago — before plans were finalised for 252 apartments — and a testament to prices that the developer expects to achieve. A thousand local residents are said to lining up for an apartment, despite the £84 million per flat price tag of the most recent Candy & Candy scheme, One Hyde Park, in Central London. The development’s prime location on Wilshire and Santa Monica Boulevards, beside the Los Angeles Country Club and the Beverly Hilton, is clearly a selling point. But, notably, the scheme is also determinedly environmentally sensitive, having aimed at and won a rare gold LEED rating from the US Green Building Council. It seems that eco-homes have won over even the super-rich of the oil-hungry US. JUDITH HEYWOOD www.9900wilshire.com

ANALYSIS ANNE ASHWORTH

A WEAK dollar does not only turn our minds to thoughts of shopping sprees in Manhattan. As soon as the value of the pound sailed through $2 last week, interest surged in acquiring a second home in the US. James Hickman, of Caxton FX, the foreign currency group, reports a significant increase in inquiries. The firm, which exchanges and transfers funds, has even been contacted by clients yet to start househunting stateside but keen to exploit the dollar’s decline — although the currency could weaken further. “They are booking into the current rate; the $2 level is a significant psychological barrier,” Mr Hickman says.

Prospective buyers should find bargain real estate readily available: house prices have subsided alongside the dollar. But anyone looking for a quick gain should be aware that there seems little prospect of imminent recovery in the housing market; indeed there is talk of further falls. Even when the mood improves, some expect a level of annual increase that barely keeps pace with inflation. Luxury property in New York, Chicago and some other cities remains unaffected by the general malaise, but elsewhere “flipping a condo” is no longer a profitable pastime.

Everyone is waiting to see how the economy will respond to the fallout from the sub-prime scandal, one of the factors that is depressing house prices. Aspiring homeowners in the sub-prime category (that is, with poor credit records) were sold mortgages with absurdly low initial repayments. When these repayments were reset at a higher level, borrowers buckled under the burden; about 1.5 million could now face the loss of their homes. It has emerged that many had “secret seconds”, additional loans advanced against their properties of which their mortgage companies knew nothing. One of the consequences could be a sharp downturn in consumer confidence — bad for the economy and more bad news for house prices.

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