FRANCE BY TRAIN
We asked David Yeates, News Editor of
www.french-property.com, for the latest market news from across the Channel
abolition of fi rst-time buyer interest- free mortgages and by the abolition of tax breaks on investment properties. “If these properties are removed
from the equation, then the slowdown is little more than the usual ‘wait-and- see’ approach that normally occurs in an election year.”
So what’s happening to French property prices?
I
t comes as no great surprise to hear from the French estate agents that sales activity has slowed this year. In their latest
review of the market, FNAIM, the national association of estate agents, state that sales are down by 15 per cent this year; the national chain Century 21 report a fall of 17 per cent; while the Laforêt group of agents (750 branches nationwide) say that sales have fallen by 11 per cent. Although there can be little doubt
that the global fi nancial crisis is setting the scene for such falls, the agents also point to a number of more prosaic factors:
• The impact of the abolition of the interest-free loan (PTZ) for older property on the number of fi rst- time buyers
• Reluctance by sellers to reduce the asking prices of their properties
• A toughening of credit conditions from the banks, despite the lower interest rates available
• The reduction in the fi scal advantages available to investors, as well as the toughening of tax rules on capital gains
So for once it seems the estate agents are all in agreement. But Jérôme Bost, of the ERA chain
of estate agents, reminds us that it was a record year for sales in 2011, as buyers sold before the new capital gains tax rules came into force. “Over a year, it’s true that the number of sales has declined by around 15 per cent, but if one compares sales in the fi rst half of the year with the second half of 2011, then the fall is only around 5 per cent,” he says. “The fall in sales mainly concerns
studio and one-bed apartments, which have been most affected by the
Prices stable, Paris region strongest There is broad agreement that prices have remained stable, and FNAIM consider that there has been no real change in prices for the past nine months, following two years of price growth in 2010 and 2011. The Île-de-France region [Paris] is
the only one in France where house prices remain above those of 2007, and FNAIM consider that the only signifi cant downward movement in prices at a regional level occurred in Nord Pas de Calais (-5.9%) and Brittany (-4.3%), while one region even reported a measurable increase in prices: Aquitaine (+1.6%). The Laforêt group point to a similar picture, with prices only falling on average by 0.4 per cent in the last quarter. They argue that the big reduction in prices took place at the start of the year, and that a further decline was cushioned by attractive rates of interest. That prompted Laurent Vimont, president of Century 21, to comment somewhat optimistically that “this might indicate that the worst is already behind us”. Of Century’s 21’s 20 regions, prices in Poitou-Charentes (next to the Dordogne) fell the most – by a whopping 13.8 per cent. These are some big differences in
“Demand will fall, but structural characteristics of the French property market continue to have a positive effect, notably due to its ‘safe-haven’ status. We are moving more towards a correction, rather slow and gradual, which could last three to four years” - Crédit Agricole
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the market, and, once you factor in more local variations of rarity and quality, then it is clear that broad average fi gures need to be used with great caution. But to end on a positive note, in Crédit Agricole’s latest review of the market, although they continue to argue that house prices are substantially overvalued, they do not consider that a collapse in prices is likely. “The demand for housing will
fall,” says Olivier Eluere, housing economist at Crédit Agricole. “But it will not collapse, because the
specifi c structural characteristics of the French property market continue to have a positive effect, notably due to its ‘safe-haven’ status. We are moving more towards a correction, rather slow and gradual, which could last three to four years.”
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