|
France’s news and current affairs magazines regularly publish special issues on the French property market, based on latest facts and figures released by a variety of sources, including Notaires de France (notaires are the officials responsible for over-seeing all French property transactions), FNAIM (the French estate agents’ association) and FONCIA (one of France’s leading property sales and management companies).
Spring 2008 has seen the usual flurry of special “property” issues from l’Expansion, l’Express and Le Figaro magazine. Wading through these reports is not something we’d expect you to do – after all, they’re long, they’re written in a fairly dry style, and naturally, they’re in French.
The good news is that we’ve ploughed through them for you, and condensed them into something a little more readable and relevant to anyone interested in the Languedoc property market.
L’Express leads with the suggestion that 2008 will be “l’année de la baisse” – the year that French house prices start to fall, just as rental rates are already doing. After twelve consecutive years of growth, the market seems to have come down to earth, says the report.
Although prices are still high, buyers have decreasing spending power and interest rates are on the up, while the US financial crisis is putting a dampner on the general outlook, suggesting that all the elements are in place for a sea change. A year previously, L’Express mooted the idea that 2007 might be the year of “la rupture” - in other words, a break from continuously rising prices – and now in 2008, after price rises representing an increase of 140 per cent since 1996, the French property market seems to have well and truly settled – the magazine suggests we are about to enter a new era, property-wise.
René Pallincourt, president of French estate agents association FNAIM, has stated for the first time in a long while that he does not rule out the possibility of prices dropping. Other facts and figures from the report include:
Sales of new build homes had declined by 10 per cent year-on-year at the end of the first quarter 2007, and the Federation of Promoteurs Constructeurs predicts a drop of 14 per cent for 2008.
Interest rates in France are on the rise. In January 2007, they were at 3.7 per cent for a loan over 15 years; one year on, they are at 4.6 per cent, according to Christophe Cremer, head of mortgage and loan rate specialist website meilleurtaux.com, who notes that the number of loans granted has fallen for the first time in ten years – “a very bad sign”.
Higher interest rates mean less households able to get a foot on the French property ladder (major French developer Nexity estimates that their “drop-out” rate has risen from 20 to 30 per cent), and this decreasing purchasing power is not helped by the fact that banks have become increasingly reluctant to make loans available in the light of the American sub-prime mortgage crisis. This in turn has an effect on developers, who are pulling in their horns and cancelling projects for which they fear they will not have enough takers.
Agents interviewed for the feature state that properties are now selling either “vite et cher” (quickly, and for high prices) or “difficilement et mal” (slowly, and at haggled-down prices). Property that is outstanding and in the upper price bracket is still going well, but anything slightly odd, poorly located or with some other minor drawback tends to sit on the market for longer than before. The market is becoming increasingly selective, and “bog standard” homes are not selling so easily any more.
The report ends by asking if prices will drop, and answers its own question with a definite “yes” in the case of character properties, where price differences between the outstanding and the plain average can be as much as 20-30 per cent. It suggests that the next two or three years will be a tricky time, but draws the conclusion that things are not “catastrophic” – unless of course the American climate worsens and hits Europe hard…
|
