Despite somewhat gloomy predictions “of a market reversal during 2022” by top French estate agents, the French Property Market is holding its own.
An announcement by the president of the ‘commission statistiques des Notaires’ of the greater Paris area, states that, “Sales figures are still excellent. The recent exceptional quarters of record sales should be followed by “more normal” ones with a dynamic market going forward.”
What does this mean for buyers?
It is true there has been a recorded drop in real estate activity. This is believed to be result of a ‘significant slowdown in the housing market’ which gained popularity in the wake of the Covid-related lockdowns. But probably unsurprising after record sales in 2021, following the pandemic. With many more buyers looking to purchase in rural locations with land. Perhaps, all this really signifies is that the French Property Market is returning to its normal state.
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While it’s true that prices and volume sales for older properties slowed in the second quarter of 2022, outside Paris, property prices still remain buoyant. Although Notaries reported in October and November that longer selling periods were beginning to show. Perhaps as a gentle warning of expectation for the year ahead.
Over two years, prices rose steadily on the French Property Market. Again, no surprise taking the Covid-19 pandemic into account. As a result of new priorities and desires of buyers during this time. But during the last quarter of 2022, many of France’s largest cities reportedly saw prices slowly fall up to 3 percent. But property prices dipping slightly in these areas, is certainly not cause for alarm. In fact, it may be purely as a result of a lack of supply. Easily explained by a reduction in the number of new builds, in combination with the previous high purchase levels of rural properties, throughout the last few years.
In stark contrast, over the final quarter of 2022, the French Property Market highlighted house price increases reported in 5 cities in France. Bordeaux, Nantes, Lyon, Strasbourg and Marseille. With apartment prices rising most quickly in Rennes, Lyon, Bordeaux, Nantes and Strasbourg. If you are looking for property the time is now. Because there is a strong recovery predicted in volumes of sales. In conjunction with the shortage of properties, this could potentially put pressure on prices, meaning they could rise shortly.
What is behind the slowdown?
One possible contributing factor behind the markets perceived slowdown, may be the ability to borrow in France. This has without doubt become harder, though certainly not impossible. For the first time in nearly ten years, and within the space of a few months, mortgage interest rates have almost doubled. Lending terms have also been tightened, only offering maximum 25 year terms.
That and the current period of uncertainty caused by the cost of living crisis, means perhaps more people are simply waiting things out. It would however be realistic to expect that the French property market cannot remain entirely unaffected over the year to come.
What are people looking for in property?
As a result of rising energy prices there is, no doubt, a heightened interest in both energy performance and heating sources of properties within the French Property Market. Also, despite the reported marginal slow-down in sales and prices of older properties, this will do little to deter overseas buyers. And those searching for space, peace and quiet for holiday homes or primary residences providing that much sought after change of lifestyle. Community is also increasingly important. People being more aware of potential challenges of social isolation. During a crisis or otherwise. Proximity to local amenities and a sense of community seems more important than ever driving buyers decision making process.
Where are people buying?
For French buyers notable locations growing in popularity are Eure-et-Loire (a rural department close to Paris), Orne in Normandy and Cantal. With the Dordogne remaining, as ever, a particular favourite for foreign buyers. For them, the Creuse is also fast gaining popularity, as is Corsica. These locations all provide a wealth of activities at your fingertips, as well as diverse international communities. Important perhaps for those who can’t realistically live within very rural areas creating potential challenges of communication and building support networks.
The reality is that despite the current economic situation, the French Property Market will weather the storm.
The French government’s proactivity in supporting the Nation during these economic times, have given buyers hope for the future. As well as the knowledge that they have not been hit as hard as some of their European neighbours. While prices may slow down, this is either relative for both buyers and sellers, or even better news for solely buyers. France will undoubtedly remain a good prospect for overseas property investors for the foreseeable future.