French House Price Inflation

[Grecian]

Can anybody tell me the current rate of French house price inflation, I appreciate that like the UK, different regions will be rising or falling quicker than others, just a general overview of the current situation would be appreciated. Are prices still rising in France at the moment, as opposed to stalling/falling in the UK?

We are looking at purchasing a property in The Vendee, so any local knowledge of prices there would be appreciated.

With the pound now in freefall against the euro, this obviously will make our purchase a lot more expensive as it stands at the moment, so whether to rent in France and hope the exchange rate goes in our favour in the future could be a possibility, if French house price inflation has slowed or stopped.

Any comments will be much appreciated.

 

[Anton Redman]

There is far more land per head of the population in France. Finding suitable land for building in most areas is not a problem. Around us in the Gironde there are by UK standards huge numbers of houses being built.

 

Expensive areas will remain expensive and probably climb faster than the average but every day cheap single storey houses will remain by UK standards cheap ( my guess)

 

Some links below.

 

http://www.completefrance.com/cs/forums/1040521/ShowPost.aspx

 

http://www.completefrance.com/cs/forums/3/914389/ShowPost.aspx#914389

 

 

 

 

[maude]

In the Vendee there is such a rash of new build beige boxes that the semi rural mix of older houses are seemingly on the market for many months or even years unless they are given away.It depends whether you are selling or buying as there is a huge anomaly in quotes we have been given by agents.To sell, the house must be at an almost give away price-but to buy there isnt,(allegedly) much suitable within the price!!!!C,est la vie!   Maude

[fussy]

hello we live in the vendee, we bought our house in may 2006, moved in,in sept, we bought it for 260,000 euros, its a four bed detached on 3,000 sgms, if we put it on the market today, we would expect to get a minimum of 300,000 euros for it. If I can help furthur, please e-mail me

[Logan]

The housing market in France has become similar to that of Spain. i.e. an over supply of new property and relatively slack demand. It's slightly different in that Spain has built huge amounts of terraced houses and apartments in concentrated costal regions. Whereas in France little box type houses can be easily, cheaply and quickly built on masses of available land. That means old and resale properties have to compete in the same market place. Result.... the new properties sell first because developers discount to shift supply stocks. Anything else struggles to sell especially if asking prices are high.

French people will generally not touch old properties because they see them as out of date money pits. That leaves only the romantic Brits and Dutch. That market is now drying up due to the credit crunch. So my prediction for the housing market in France for 2008 is stagnation generally with little or no capital appreciation. I do not anticipate falls in values in France unlike the UK and Spain where a market correction is long overdue.

As for Sterling I think it will remain depressed against all currencies especially the Euro for most of 2008/9. The ECB intends to keep interest rates up to combat inflationary pressures in the EU zone economy. The UK Central bank will need to cut rates to stimulate a flagging economy.

Hope this helps.

 

[ams]

If you have a look at the Fnaim site you should find most of the information that you are looking for. At the end of November 2007 the price moved North as against the prior trends.

 

At the 30.11.2007 the average price increase was 3.7% for the country, 4.5% for houses and 3.2% for apartments.

In addition if you look at the anil site the 6 months ending 30.06.2007 show an annual increase for renters of 2.76% which is based upon three indexes, mainely general inflation and house building costs.

Hope the above helps.

ams

[groslard]

[quote user="fussy"]

hello we live in the vendee, we bought our house in may 2006, moved in,in sept, we bought it for 260,000 euros, its a four bed detached on 3,000 sgms, if we put it on the market today, we would expect to get a minimum of 300,000 euros for it. If I can help furthur, please e-mail me

[/quote]

I expect that most of the people on here have experience of buying in France.

It is when you try to sell that you find the real value[6]

[DerekJ]

Viewing the situation as a potential buyer in 2008 I can only say that with the downward spiral of the Pound against the Euro compared to the situation back in August (when we made our first house hunting foray) we will be very wary on the pricing. In the back of our minds will be what we would have paid versus what we might now have to pay.

I suspect many Brits using UK based income/revenue will be feeling somewhat the same. What effect this may have on the overall French housing market I don't know but for some areas popular with UK buyers and also for those types of properties that are also attractive to UK buyers  I suspect the effect may be to depress sales.  Being selfish... I hope so.

[maude]

Wish Fussy every hope! Maude

[ams]

In the region where we live 17, land for housing is in short supply to the extent that land for building has more than doubled over the past 18 months. Typical prices are in excess of 80€ per m2. In addition the cost of building basic houses has risen by more than 22% over the past two years. This is essentially due to the rising prices of basic commodities, cement, steel etc.

 

ams

[Logan]

[quote user="ams"]

In the region where we live 17, land for housing is in short supply to the extent that land for building has more than doubled over the past 18 months. Typical prices are in excess of 80€ per m2. In addition the cost of building basic houses has risen by more than 22% over the past two years. This is essentially due to the rising prices of basic commodities, cement, steel etc.

 

ams

[/quote]

That valuation seems excessive 'ams'. Although there are many factors in play, particulary in coastal regions such as Charente-Maritime (17). Property values in France are very regionalised. Factors such as availability of employment vary considerably. In essence if there is lots of work available and the local economy is doing well property values will reflect this. In rural Limousin where employment is hard to find you will find cheaper property especially building land. Property values also reflect incomes which in some parts of France are very low.

[ams]

In fact the valuation I gave is on the low side. We had several houses built recently. When we purchased the land it was 47€ per m2, now in the same area 300 metres away the asking price is 105€ per m2. I fully agree with you about the regional effects, some of the artisans came from normandy. We found it virtually impossible to get a tiler, eventually after phoning every tiler in the yellow pages in 17 and 16 we managed to obtain just 3 devis. When we went back to our builders to obtain quotes for other houses we were shocked at the price increases for the same houses.

 

I accept fully what you are saying in respect of ability to find artisans, land prices etc, however if you look at the house price construction index on the anil site, house construction inflation has been in excess of 12% over the past two years, that represents a counrtywide average.

My feeling is that house prices will continue to rise at a modest rate of  2% to 3% in 2008 due to the sarko factor plus the introduction of mortgage interest allowance.

 

ams

 

[fussy]

just as a footnote maud we have just come home from a party while we were there we heard that some people we know who live in a house almost identical to ours, had their house valued a week ago and was told by the agent that they would get 290,000 no trouble, so we wer'nt far out

[groslard]

My prediction for 2008:

Modern builds, bought  mainly by French people may hold their own or just stagnate, but I suspect that the old 'character' properties bought largely by foreigners  will drop in price, as a result of the credit crisis, the fall in sterling, the crash in the UK housing market, and the CMU problems.

Perhaps later this will attract French buyers back into the sector and provide a corrective.

But I am usually wrong[;-)]

[Alan Zoff]

[quote user="fussy"]just as a footnote maud we have just come home from a party while we were there we heard that some people we know who live in a house almost identical to ours, had their house valued a week ago and was told by the agent that they would get 290,000 no trouble, so we wer'nt far out[/quote]

Well if they were told this by an agent then it must be true.

[united]

The Living France Magazine quotes average prices for the Pays De La Loire region. They quote their figures from the French Property Buyers Handbook 2nd edition so they must think its a credible source. I have not read the book so I do not know if they break the figures down to deparment level or lower.

 Averages can also mask detail but in my view a little research is never wasted.

Also on another site there is some info http://www.inthevendee.com/vendee_news_story.php?news=2007-11-06.

 

[Quillan]

An article in 'La Independant', our regional paper, a few weeks back said that houses were still over priced in the region even though they had dropped by around 15% over the last 3 years. They were talking about mid range houses and said that high end, which is outside of the normal French persons pocket (their words not mine) continued to increase in value at about 2 to 3 percent.

For those Brits buying the value of the Euro must be having an effect. People I know who have retired and have there pension transferred every month have experienced around a 7% decrease in value they say due to exchange rates. Buying a house is one thing but one has to live and this would be something early retirees perhaps should take in to account.

[Frederick]

Logan.........I noted one of your posts from a long time back....and the accuracy of your predicion as to the value of the pound against the euro at this  moment in time was pretty good ....you said expect a euro worth 72p well is 73 and a bit now is it not and pushing 74 ....  Now tell me .......I have noted radio commentators talking about the pound today . need a low pound for exports ..and linking it with Mr Wilsons  words    "The pound it your pocket .....etc  !   what does  12% above "Fair Rate " mean ?  whats "Fair Rate " ?  and what are we being lined up for now ? excuse my ignorance its not part of my world ....

[Frederick]

Sorry Logan     Should be "Fair Value "...Pound is 12% above Fair value ?

[Logan]

[quote user="Frederick"]Sorry Logan     Should be "Fair Value "...Pound is 12% above Fair value ?[/quote]

The concept of 'fair value' is explained here.

http://emagazine.credit-suisse.com/app/article/index.cfm?aoid=178976&coid=90&fuseaction=OpenArticle&lang=EN

The value of Sterling against the Euro currently is near or approaching its so called 'fair value'. Personally I dislike this term because it's always subjective how a countries economy is performing. What I do know is that political pressures often distort currency values. The Governor of the EU Central bank seeks to keep the Euro high. Most EU political leaders are desperate for a weakened Euro. This is all very similar to the currency exchange crisis of the early 1990's. The strong DM caused a major economic recession in the EU eventually. Investors in Sterling such as I caught a cold which lasted for some years. That’s one of the reasons why there has been a recent flight from Sterling internationally. The German Central Bank was wrong then to keep the DM high and today it’s also wrong for the Euro.

Nothing new under the sun. [:D]

PS: I think that 12% above fair value relates to the US Dollar not the Euro.

[Frederick]

Thank you Logan for going to so much trouble ......I am a bit wiser now ! and yes the lady on the BBC was talking about the days of the  Wilson devaluation and how things are today...and was talking about the dollar.....".Fair Value "  was a term I had not heard .   

[Sprogster]

The OECD states that the UK, France and Spain have the most over valued residential property market in Europe and therefore the countries most likely to see a correction.

The majority of foreign residential property buyers in France are the Brits, who apparently account for two thirds of of foreign buyers. As Brits tend to buy older properties that the French are not interested in, any major reduction in the number of Brit buyers has to have a significant impact on the saleability of this type of property and with the fall in the value of Sterling and a stagnant/falling UK housing market next year, this is more than likely. Also with the credit squeeze it is going to be difficult to borrow money to finance second home purchases, unless you have an impecable credit record and low current borrowing commitments.

With the exception of Provence, Cote D'Azur and Ski resorts in the Alps, other foreign buyers do not have the anything like the same interest in French rural property as this has been mainly a British love affair. Other Europeans tend to look further south for a better climate than they have at home and although there are Dutch and Belgian buyers, being small countries it is unlikely they can make a material difference to the market and they are being affected by the same credit squeeze anyway.

What this more than likely means, is that selling a rural French property that does not appeal to local French buyers is going to be very difficult for the next two years or so and therefore prospective buyers will be in a strong negotiating position.

 

 

[DerekJ]

Sprogster. You've worded your reply much better than I did mine but basically we have expressed a similar view. It is this hope that we will be in a strong negotiating position that is still tempting us to make another house hunting foray in a few months time. If the negotiating strength doesn't materialise I guess we will be walking away from any French house purchase.

We very much still want to buy a second home in France but we don't intend to throw money away either.

[groslard]

Sprogster: I think that's pretty much in line with my post.

[Logan]

[quote user="DerekJ"]Sprogster. You've worded your reply much better than I did mine but basically we have expressed a similar view. It is this hope that we will be in a strong negotiating position that is still tempting us to make another house hunting foray in a few months time. If the negotiating strength doesn't materialise I guess we will be walking away from any French house purchase.
We very much still want to buy a second home in France but we don't intend to throw money away either.
[/quote]

My advice to you Derek for what it's worth is do lots of research in your preferred region of France. Negotiate severely the price of a house you like and intend to keep for it's lifestyle benefits not investment. Think in terms of a minimum of 10 years ownership. You should then expect a modest capital gain of a minimum of 15%-20%. It could be more but don't expect it. Do not buy until Sterling comes back to 0.68-70 pence to the Euro. If you follow these rules your investment will be fine. Buying in France is not and never has been a way to make serious money.