French house prices forecast to fall

[Sprogster]

"It is rare for property professionals and housing economists in France to agree on their prognostics, but for once there does seem to be a general consensus that both sales and prices will fall this year.
FNAIM, Century 21, the Notaires, economists and the French banks are all forecasting a decline of between 10-15%.
Apparently, recent reports from agents and notaires certainly indicate a slowdown in sales and prices is happening, accompanied by a spectacular (40%) fall in the number of mortgages that have been granted, as banks tighten their lending criteria.
Other factors coming into play adversely impacting on house prices, especially investment property, are the toughening of the capital gains tax regime, increases in social charges and reduction in tax breaks."

 

Source: eNewsletter article - French-property.com

[dexter]

Got any good news?!

[Sprogster]

If I can find any dexter you will be the first to know!

[AnOther]

Bovvered ?

Not !

Our house is our home not an investment so we'll leave it to our kids to worry about what it's worth !

[Quillan]

[quote user="AnOther"]Bovvered ?

Not !

Our house is our home not an investment so we'll leave it to our kids to worry about what it's worth !

[/quote]

Exactly. Sometimes one of our guests, usually English I might add, ask how much my house is worth. Although it's nothing to do with them and I think "how rude" I answer "Nothing, it only has a value when I sell it and as I am not it has no value".

It is surprising though what people think about house prices and how they view them. Somebody I know of is going back to the UK. They put their house up for €80k and were really annoyed that in the end they had to accept €50k. I asked out of interest how much they paid for their house some seven years ago, answer €12k plus €7k for works. Well that's not a bad little earner plus they will benefit from the exchange rate going back to the UK.

[NormanH]

I used to wear a T-Shirt that has now fallen apart from frequent washing.

The slogan was "I don't give a F  about the price of your house"

On the other hand the Europhobic Ambrose Evans-Pritchard in the Telegraph agrees:

http://www.telegraph.co.uk/finance/economics/houseprices/9244152/France-faces-40pc-house-price-slump.html

[bixy]

We bumped into our local estate agent the other day. She reckoned that house prices have fallen by - wait for it - 50%! Admittedly she is talking about her area, the Morvan, in Burgundy, but she had no reason to lie to us since we are neither buying nor selling a property. Makes you think.

Patrick

[Quillan]

She can't be that bright because house prices have been dropping for some time now. Whatever you see a property advertised for you can bet that it is bought for a cheaper price. I wouldn't go as far as saying 50% but you can think between 15 and 20% at the moment, except in places like Paris of course. Having said that the expensive houses (1.5M and above) are still moving.

[Frederick]

[quote user="AnOther"]Bovvered ?

Not !

Our house is our home not an investment so we'll leave it to our kids to worry about what it's worth !

[/quote]

The same for me ... I hope my kids who have for years been taking their holidays in my place will long continue to do so when we are gone .

As far as the Vendee  goes they seem to be continuing to lay out land into plots and and  putting  up new houses   ..I have looked at one or two estate  agents  free papers this year and I can not  say I have noticed any cheap properties .

[PaulT]

Seems a different story here:

http://www.completefrance.com/french-property/news/french_property_market_going_strong_1_1416548

Paul

[Gardengirl]

Prices in our little town did dip, but seem to have pretty much recovered. People who have sold in out apartment block in the last couple of years have been satisfied with prices achieved. There heve been a number of other, more recent blocks put up, but this doesn't seem to have affected prices. We are told by estate agents that our's is 'haut de gamme', but having seen the building quality, it doesn't seem as though it can be true - the build quality was very poor. But apparently others locally are worse!! [:'(]

[AnOther]

[quote user="bixy"]She reckoned that house prices have fallen by - wait for it - 50%![/quote]Perhaps true of some properties being sold by returnees so desperate to sell that they will take any offer but in general, nah, don't believe it.

Some still don't seem to get it though, €100,000 purchase price + €100,000 renovation does not automatically equal a property worth €300,000 !!!

In the current climate if you get your money back I think you can reckon you've done reasonably well and any profit is a bonus.

[idun]

I would love to see figures as to how much  house prices actually went up in those areas of France that were cheap to start with, due to depopulation. And the statisics of  how much things have really changed in those regions, ie new families moving in to these regions, retirees, changing the dynamics.  And how people returning to the Uk will also change these regions and really affect house prices and a lot of other aspects of their economies.

Would I ever find such figures and would I really put complete faith in insee? not sure about that!

What we actually put into our houses, financially speaking, well, are the buyers that interested in that. They see, they calculate what is what, and then they buy at the price they want and change everything.

[Sprogster]

Paul, if you re-read the article it is only referring to a percentage of anonymous searches on a particular overseas property website, not material enquiries or instructions.

I can understand those selling French property wanting to talk up the market, but there is a thin line between being misleading, as the facts are according the French banks, notaries and major immobiler associations like FNAIM, that the current French property market is weak.

Bank interest rates maybe low, but you try and get a mortgage in France and you will struggle, as the banks are very reluctant to lend at the moment.

[JeanS]

We're in the process of putting our house in 36 on the market.  It is already on with one agent & another has been to visit & is coming again to take pictures etc.  How different to the UK where the agent comes, views - values - takes pictures and within 2 days everything is on their website plus others.  Here it takes about 2-3 weeks before anything happens. 

With regard to value - we are aware that the market has declined, but as others have stated, we bought, did some work and have had some good times.  The children have become bored with the house - was ok when the grandchildren were younger but now we're too remote.

We know how much we'd like to achieve and will be happy with that - anything above will be a bonus. So until that time, we'll just keep coming and staying for a few months at a time and enjoy the peace & calm.

 

[LEO]

The majority of Brits

when deciding to sell their French house ,value it using the “wrong

method”.

Initial property

cost (A) plus renovation costs (B) plus a small profit to

cover investment/inflation.(C)

A plus B and C =

Valuation

What one paid for the

property plus what has been spent on improvements is irrelevant when

marketing !

It only becomes

relevant after you have collected and transferred the dosh back in to

pounds!

A useful

barometer is knowing what similar properties have sold for in your

own region

A useless

barometer is looking at what price other similar properties are

currently listed

[bixy]

Well said Leo. A friend who is an agent for an estate agent gave us a valuation on our house. We were devastated. But what about all the work we have done, the thousands of back breaking hours, the enormous amount of money we have spent? But of course she saw none of that. She saw square meterage, facilities, finish, land, and based her valuation on that. Still, it doesn't much matter as we have no intention of moving and we have a much improved home to live in. But I think there are many wanting to sell, using Leo's formula who will be disappointed.

Patrick

[P-D de Rouffignac]

Despite Sprogtster's post, I have yet to see any consistent forecasts/evidence of falling house prices in France. As always, generalisations are unreliable within any property market, where two 'similar' houses in the same street can differ widely in value.

To take a specific example, I currenlyt live in a complex built around a leisure marina, where some buildings/apartments are much less attactive than others - north facing, facing a car park, never reached by the sun, immediately above a known noisy restaurant/bar, comparatively poor construction (thermal/acoustic insulation varies between the different buildings), neglected maintenance by the syndic etc - all of which can reduce their saleable value. Some located above a noisy bar I would classify as unsaleable, theoretically of no value. But they may sell - at a discount - but they do not represent the average value of the area, they merely distort it.

The French own around 3 million second homes and although they account for just 7% of annual property transactions overall, around where I live they represent 70% of the local housing stock, and a correspondingly higher percentage of annual sales. As a result local sales are down - due a to surplus of second homes (largely studios and F2s) on the market and hesitation about a property purchase which could be classified as a luxury rather than a necessity. Down the road however a brand new housing development (one of several locally) of detached and semi-detached individual homes has sold out within 12 months, bought by people with families, in jobs and moving permanently to the area.

It is impossible to generalise, as I hope I have demonstrated by this small example, as no two markets are the same.

[idun]

We sold in 2009 and prices had dropped by about 18%. I've looked at prices in my old village recently and they remain down on their dizzy heights in 2007 and early 2008. And the houses that were for sale in 2007, remain for sale at these inflated prices, including my neighbours house. What people ask and expect and what people get, are two different things.

Ofcourse what we 'do' to our homes is surely down to us and our comfort. I have seen cases where places have been done up to an exceedingly high standard and have sold at what is well above the market price. But most places, well, the new kitchen and bathroom and decoration.......... and people will see, like them or not, buy and change the lot. I don't think that we should expect to get back the 'renovation' investment if we are selling within a very few years of buying....... and inflation will bump up the price eventually.

But will it. I have no idea how all the houses can be sold at current prices in twenty, thirty years time. So many people are on very low wages these days and what with other bills to pay, just how can they afford to buy somewhere five, six or seven times their salary as well as getting their deposit together.  I reckon that the market will plummet as my generation dies off. No one with the money to buy, or few......... and I'll not be around to see it.[:D]

 

[Sprogster]

P-D de R, I think your analogy can be extended to Brits, many of whom being second home owners, who have bought in rural areas of France, where the younger population is in decline due to the lack of employment opportunities and therefore there is little local demand for housing from the French. In this type of situation you are over reliant on new foreign buyers continue to support the rural French housing market, because as you have previously said most second home owners sell within 8 to 10 years. Therefore, if the volume of foreign and second home owner buyers declines as has been the case, then values are bound to be adversely affected.

I believe one of the concerns for the French housing market is that a lot of the tax incentives that kept the market reasonably buoyant compared to other countries during the downturn have been removed and this together with the uncertainty of the new French socialist government, could cause values to fall.

[Aly]

I agree with sprogster`s assessment and I would add,.the big agencies like VEF have all gone. Our house has lost some 30% of its value in the last 2 years.

True renovation costs add little to property value. Some areas like Paris and Nice have faired well. I think things will just get worse.

One site I found is full of Chambre d`hotes at knock down prices - What a shame if France heads the way of Spain and Cyprus

[Sprogster]

In France houses and apartments seem to be valued on a set amount per square metre that applies to the area. Little allowance seems to be made for views and the current state of the property, as long as it is habitable. A neigbour of mine sold his nearly new maison secondaire last year and the French buyer promptly ripped out the expensive virtually unused solid wood provencal kitchen, as they like many French preferred the basic cheaper modern style!

I think most French have a more functional attitude towards their homes compared to Brits and the luxury window treatments, bathrooms and kitchens so popular with Brit owners, seem lost on many French people, who do not seem to see the point of spending a lot of money on your house, even general painting and maintenance.

[idun]

We nearly bought two different lots of land rather cheaply for our region with as they say, views to die for. We didn't, and the land was relatively cheap because it was nulle part. We would have had a terrible job getting anywhere in winter and would have had to have a 4x4. When you have to get to work it is impractical to live nulle part where the snow plough will not venture for hours, if at all.

So yes, views per se are not that important. However, there are also more practical areas in my old region, even with views, which were much cheaper for many reasons, some were rough, some suffered pollution, which happens in the Alpes too and some were because of the weather in that little area. And some were just, well, I don' t know how to describe them, maybe looked like they were places where elephants would go to die, and some might have as it was more or less the route that Hannibal took. And this is from me who moved to a relatively scruffy french village, although most were back then and mine did smarten itself up a bit over the years.

I find it interesting the way non french look at buying in France. It seems to me that they look at the price and the view and that defines and never seem to wonder why the french have not been queueing up to get such a 'beautiful bargain'?

I don't think that it is because the french don't like their homes that they do not paint them, it is because paint used to be rubbish and expensive to boot. I put 6 coats of white paint, on the walls in my sejour and it still wasn't a good finish. Paints have improved, but in some ways it becomes part of the culture to do these jobs rarely. Also, I don't know that many french people who have the money to get such jobs done regularly.

[P-D de Rouffignac]

Absolutely spot on, Sprogster! And extremely frustrating that as you say the French - and even a lot of estate agents - are so hung up on the price-per-square-metre. And this regardless of location, neighbours, aspect, disposition of the rooms (square metres lost through poor layout etc), condition etc etc. I am currently looking in Perpignan where the 'average' square metre price is just under 2000 euros, but I am seeing properties advertised at anything beteeen 1000 euros/m² (generally to be avoided) and occasionally over 3000 euros/m². Coming back to the Port area where I currently live, I am selling through a couple of agencies and also have my private For Sale board outside - invariably every phone call I get starts with 'How much?' At least if potential buyers visit one of the agencies they see the photos and other details before coming to the question of price.

Briefly on the question of Spain compared with France, Spanish developers built on spec and got caught out at the end of a boom, leaving a surplus of around 1 million empty properties. Buyers bought on variable rate mortgages (as in USA) and are now faced with repayments two or three times higher than they anticipated - and this at a time of 25% unemployment. I saw yet another documentary a few nights ago where a family of six (three generations) offered to continue repaying around 500 euros a month but the bank is insisting on nearly 2000, and threatening eviction (even though this supposed to be forbidden under recent legilsation). The result is another homeless family and another unsaleable property owned by a bank.

In France there is little or no speculative building (developments are at least 50% pre-sold before work begins), banks are cautious lenders and rates still hovering around 4%. There is a believed 'shortage' of some 2 million homes, in contrast with Spain. The French problem, as noted, is low output, high taxes and social charges, general uncertainty about the future. Little wonder that some 350,000 (working) French live in and around London and pay some of the highest rental prices in Europe (typically four sharing a £2000 per month furnished apartment).  

 

[Aly]

I also think many French are not interested in renovation or old houses particularly in rural areas. They prefer new, insulated etc.

I agree with the comparison with Spain but house prices are falling everywhere some exceptions.

The drop in overseas buyers has had a big impact on France. The market was much slower anyway.