FRENCH PROPERTY MARKET CONDITIONS 2008
2008 - Last Quarter
The last quarter has been marked by more sober sentiment as international financial events take effect on the national economy. The French market has been remarkably resilient until now, although, with the current mood, prices have now begun to edge downwards. There are still high levels of stock at mid-range values although we have seen sustained demand at the entry level of the market.
Many British buyers are holding off until the economic outlook improves, but as usual when this day comes, it will also become more difficult to find the deals and negotiate the terms that are currently available.
Banks have been actively looking for business and although lending conditions are strict it seems as if there are funds available to borrowers.
2008 - Mid year
Credit crunch, weakening pound, and stagnant property market in the UK have all had an effect on the confidence of UK buyers into the French property market. None the less, we find that there is still a healthy volume of buyers prepared to bear these conditions and who are sufficiently motivated to find a home in France. Lifestyle continues to be the principal motivation. On the positive side for purchasers there is still a generous supply of property and as a result there is both choice and value to be found in the market.
The French market is still active and we are seeing an influx of buyers in the South West from both Northern and South Eastern France. The impact of the Credit crunch on the French market has been relatively slight. This is largely due to the controls on borrowing which are imposed by law. Borrowing periods continue to extend with the average mortgage period now slightly over 21 years and many new mortgages being offered over 30 years. We expect to see the gap between English and French property values continue to narrow through the year. The French market is officially still growing in value at a rate of 2,7% per annum.
With the current insecurity in banking circles and financial markets we expect growth to remain fairly flat through 2008. We have concerns that there will be some instability in the buy to let market in areas where supply has outstripped demand.
Market report end 2007 beginning 2008.
The year ended with supply of property remaining high and level of demand steady. During this period we have seen sustained demand for quality properties in the 5-800 000 euro price bracket and within this range supply has easily been met by demand. Overall the market has measured growth for 2007 at 3.8%, slightly below the predictions we made in 2007. This is in part due to changing expectations from sellers concerned about the unsettled financial markets and fallout from the credit crunch in the United States.
Pricing
We have found sellers to be far more realistic about prices and have been able to renegotiate numerous mandates to reflect this mood. This has resulted in a greater proportion of properties we have for sale being offered at fair market value, thus providing purchasers a wider choice than has been common in recent years. In addition, a some English sellers have been ready to accept a reduction in asking price when repatriating the capital as they have been able to benefit from the stronger euro exchange rate.
Outlook 2008
e expect 2008 to offer some good buying opportunities with prices remaining at current levels through the first half of the year. France has increased in popularity with English purchasers and is now said to outstrip Spain as a destination for second homes. We have noticed an upturn of 10% in web enquiries through the start of 2008 and a similar increase in purchaser registrations at the “London Olympia - Vive la France” and “Birmingham -French property news” property exhibitions this year.
With more buyers finding availability of suitable properties, sales have begun briskly in 2008. Despite the positive start to the year we do not expect to see any dramatic growth until levels of supply have started to shrink.
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