The trend in the French property market is, as was expected, still in decline. However, there are tentative signs of ‘green shoots’ of recovery in the general French economy and within the property market, in the ‘new build’ sector.
That said, its’ still much too early to hazard a guess as to whether these small signs will have a positive effect on the French property prices in the near future.
Here’s a breakdown of the property prices for Provincial France, published in the latest report by Notaires de France
Price comparison between the 3rd and 4th Quarter of 2014
- Apartments 1.3% lower than the previous quarter
- Period houses 1.5% lower than the previous quarter
Price comparison between the 4th quarter 2013 and the 4th quarter 2014 (annual price trend)
- Apartments 2.9% lower than the same quarter in 2013
- Period houses 2.4% lower than the same quarter in 2013
From the analysis of the history of Notaires-INSEE indexes it shows that prices observed in most departments in 2014 were lower than prices in 2006.
French Property resale market
The larger decline in property prices are still in the rural areas. Probably, as the report states ‘due to town and country planning policies, which have concentrated solely on urban areas and neglected rural areas’.
Although there is some reason for a little bit of optimism here because the number of preliminary contracts are now on the rise. This may be a seasonal phenomenon but again something worth taking note of. However, if you read my section below regarding mortgages, you’ll understand why this increase isn’t currently being turned into actual sales.
New Builds effect on the market
When I last wrote about the affect of new builds on the market I noted:
The combination of the **Pinel scheme and the extension of zero rated loans was expected to have a beneficial effect on first time buyers and therefore an upturn for 2015 was widely expected. However, as the supply of new builds is now out of step with demand in terms of volume, location and prices means this housing recovery plan has not had the desired effect. Therefore, the upturn is not now expected until 2016.
I’m pleased to say that these measures do appear to be having a positive effect sooner than expected, with the number of approved new builds rising by 0.1% from December 2014 to February 2015. Whilst due to the new build legislation issues of the past couple of years, this will still take a while to have an effect on actual builds, with the number of new builds showing a 1.8% drop compared to the previous year.
The French mortgage interest rates are at a record low but Notaries have observed a rise in preliminary contracts of sale that come to nothing due to banks refusing the mortgage application, or that there are complications relating to insurances.
The Notaires de France report stated that ‘More willingness on the part of the banks would be welcome’. Now where have we heard that before!? I totally agree that the market has no chance of a true recovery until the banks start taking a more reasonable approach.
Is this the right time to buy a French Property?
Well the answer is yes and no! From reading this latest report and reviewing various trends analysis my view is yes, go ahead and buy your French home but buy it because you want to, for the lifestyle, or income potential and for the long term.
You may never get such a fabulous set of circumstances stacked in your favour again: Low interest rates, a favourable exchange rate (1.00 BP= 1.39486 EUR at the time of publishing this report) and house prices now back to roughly where they were in 2006.
What are the risks of buying a property in France in 2015?
Buying a home in France in 2015 is not for you if you’re looking for a fast return on your capital investment, or are worried in any way about further falls over the next year or so.
However, you might be reassured by the leading economists Xerfi predicting that latest falls will take the overall 5 year average (2012-2015) to a total fall of 5.5%. This, as they point out is a modest fall given that French property prices have increased by around 150% over 19 years. Meaning French property investment was and is still good for the long term investor but has, of late been more risky for the short term speculator.
If you decide that now is most certainly the time for you to buy your home in France, then our advice, as always is to speak with reputable industry experts.
Here are a few specialist companies we particularly like for their excellent service levels, that you might find useful to know.
French Currency exchange
For more details about exchange rates and transferring money abroad, then why not speak with the lovely team at MoneyCorp. You will speak with a real person who knows the market (not someone who’s reading from a script – my pet hate!) and if you set up an account with them, you’ll be allocated a dedicated member of staff to work with.
Some of the things MoneyCorp can help you do:
- Buy a home abroad.
- Convert rental income back into your desired currency.
- Pay mortgages/utility bills/maintenance costs abroad. Emigrate abroad (or move back home).
- Receive your pension payments abroad.
- Transfer money to friends and family overseas.
- Business transfers.
To be sure you’ve got the latest information about what insurances you need in place to buy your French home or living in France, please contact Nick and the team at Asttral
ASTTRAL, through it’s French and English staff can help you to fully understand the market and arrange the appropriate Insurance in the following Sectors:
Property; Health; Motor; Personal; Accident; life; marine; commercial; events; special risk investment; placements.
We found that over the years that the support we received from Asttral almost certainly saved us money and Nick was one of the first people we’d call in a crisis!
If you’re at all worried about being able to secure a French mortgage, please don’t despair. We’ve found a fabulous broker, French Mortgages Direct, who can often secure a mortgage for clients where banks have previously given a resounding “NON”!
French Mortgage Direct is an independent registered mortgage broker, based in France, with over 10 years experience arranging mortgages for international clients worldwide.
You’ll be well looked after and will speak directly with expert brokers, well versed in arranging French mortgages for all sorts of clients buying all over France. So you can be sure that you are in good hands.
Something we all have a tendency put off but to do so when planning your estate to include French property, could be disastrous. We particularly like Beacon Wealth Management
How Beacon can help
Firstly they will take the time to get to know you and your financial situation. They will make a list of priorities and suggestions.
There is no charge for this as they firmly believe that their bespoke solution is the best step to a lasting professional relationship.
Beacon covers the following areas:
- Taxation – They will help you find ways to minimise your taxes.
- Investments – They can review your existing investments and recommend new ones in a variety of currencies that are in harmony with both the UK and French tax systems.
- Pensions – Thy ensure that your current and future arrangements work for you in France.
Coming soon: Property price analysis, by department and key towns of the Languedoc
*Pinel scheme – (dipositif Pinel) was created promote affordable housing and allows French taxpayers who purchase a new home or building from 1 September, 2014 onwards to benefit from a reduction in their income tax. There are quite a few clauses and stipulations and the building must meet the energy and thermal regulations and economic standards.