With Credit Agricole, one of France’s biggest banks, forecasting a national fall in property prices of 5 to 6% next year with an 8% fall in overall sales, the French real estate market could face a tough year.
This year hasn’t been too bad with prices in and around Paris and in Provence and the South of France generally increasing. But it has been a mixed bad with parts of the country seeing price falls.
Now France is embroiled in the middle of the eurozone crisis and the property market is unlikely to go unscathed. Figures for 2011 won’t be available for some weeks yet but anecdotal evidence suggests transaction levels are likely to be at their lowest for 40 years, almost 50% down on 2007 according to some estimates.
The FNAIM, the largest body representing estate agents in France has reported a range of price fluctuations for 2011, from a fall of 4.6% in Brittany to an increase of 10.1% in Champagne Ardenne.
But the key is pricing, according to estate agents. If a property is priced attractively it will sell, they say, and those with the money can still get a relative bargain in some locations.
‘The market is in danger of stalling unless we all take a sensible view on pricing. If owners and estate agents are realistic with their expectations and valuations then the French property market can remain amongst the healthiest and most attractive in Europe,’ said Trevor Leggett of Leggett Immobilier.
‘We play host to more tourists than any other country in the world for a variety of wonderful reasons and we regularly top the polls for offering the highest quality of life. In troubled times owners and investors seek safe havens and they simply don't come more secure or enjoyable than France,’ he explained.
‘I'm optimistic that, with prudence in the short term, the French property market has an extremely healthy mid to long term future,’ he added.
He also pointed out that for those with the finance to buy prices have never been more attractive and you can find an old, stone farmhouse in the country with large open fireplaces, beamed ceilings and terraccotta tiled floors at prices similar to those you would have paid in 2004/5.
One significant change is the origin of overseas buyers. Agents report an increase in buyers from countries other than the traditional base of the UK, Germany and the Netherlands. There has been an increase in inquiries from Asia, North America, South America, Africa and Australia.
‘One noticeable trend has been an increasing number of sales to both expat British buyers who are currently living overseas and would rather move to France than return home and expat French buyers who are returning home from a stint overseas,’ said Leggett.
Getting a mortgage is also likely to become harder. This time last year French lenders had some of the lowest fixed rates seen in Europe but inflation has led to rates rising again.
‘We have seen increases in the main European Central Bank rate from 1% back up to 1.5%. These increases put the brakes on the mini boom in French property prices which saw Paris experiencing off the chart price rises, whilst France as a whole was ticking over at a respectable 6% average for the year,’ said John Busby, director of French Private Finance.
He explained that the current unease brought about by the sheer scale of exposure to the debts of the less fiscally responsible nations in the eurozone has led to an increase in the mortgage rates for new customers across the board despite interest rate cuts being predicted.
‘The problem is that these cuts are not being passed on the form of cheaper variable and capped rate loans for new customers as banks maintain or increase their margins in readiness for impending new Basle III capital base ratios and to pay for the increased costs of wholesale borrowing,’ said Busby.
‘However, competitive rates are still available for a number of local banks in France with a 20 year fixed rate possible at 4.25%, less than 1% of the all time lowest rate,’ he added. (PropertyWire)
Ms Olimpia Bronowicka (left), spokesperson for the 
