house prices in France

[woolybananasbrother]

Purely by chance I bumped into a French house agent and we got chatting. Wow, was she pessimistic about housing prospects for the next couple of years or so. Nothing seems to be moving according to her and it will only get worse. New builds are sticking and builders are just stopping new starts. Now, admittedly, the French can be delightfully pessimistic, but this one shook me a bit. And house prices she sees just going into freefall.

Hope she is wrong

[Cat]

I don't think she's wrong,  What with the value of the euro against the pound and the dollar, the fuel crisis, the decline in the pouvoir d'achat, the credit crunch and the sub prime crisis, her pessimism is shared by a great many French people.  It is not so bad in cities, as there is always demand for housing, but outside of that, the situation is really quite grim already. 

News reports are only beginning to pick up on the downward trend in new builds, but I think that France is generally lacking confidence in the future at the moment, and we are starting to see the results.  I shouldn't think that it is much better in the UK?

[woolybananasbrother]

Personally I dont much monitor the UK market as I have  little interest but perhaps it might be a good moment, say about january 2009 to pick up a small flat. Any ideas anyone? You there Gluey?

[Tony F Dordogne]

I was chatting with a chumlette yesterday who works in an immoblier - nothing moving, prices falling, Brits not buying because of the currecy problems, all in all, very pessemistic.

[Mr Coeur de Lion]

Think it depends on location. I know of real estate agents swamped with work at present, while others are struggling like mad.

But I reckon in the next couple of years it will be a good time to buy again. And then things will eventually go back up again. As it always does.

I blame the media for a lot of this credit crunch with their doom & gloom and scare tactics.

[mint]

Well then, is this a good time to buy a house, sit it out for a couple of years and then sell on?

In the Charente Maritime, I see that houses are still overpriced and, so far, have not been tempted.  Any comments?

[chessfou]

The strict borrowing limits here should save France from the worst of it; although prices will drop here they shouldn't drop remotely as much as in Spain, Ireland and UK where almost limitless borrowing was available ("self-cert" a.k.a. "liar" mortgages and "my pension's a BTL" or two) will drop much more. Serious commentators suggest 40-50% falls which would seem eminently reasonable - that would take prices back (from peak) to where they were in 2001 and about double what they were in 1993. That still represents about 5% p.a. compound growth or, looked at another way, standing still at inflation+GDP growth (roughly 2.5% each over that period - bit more for inflation, bit less for GDP growth). That is still distinctly better than the Stock Market and suggests that stocks are undervalued at the moment while UK, Irish and Spanish housing is greatly overvalued (for the moment).

[Anton Redman]

For me it depends on where you are. I know parts of France where 20 % of the housing is owned by Brits which equartes to 80 % of houses for sale being Uk owned and a very odd market.

[suzy]

For those of us making the move in the next year or so, having sold here (UK) a buyers market is just what we need.

 

Sue

[Baz]

[quote user="suzy"]

For those of us making the move in the next year or so, having sold here (UK) a buyers market is just what we need.

Sue

[/quote]

You will also have to hope that the strength of sterling against the euro improves as well. The current drop has effectively made euro property 17.5% more expensive for the Brits over the last year.

Baz

[P-D de Rouffignac]

After ten years of steady year-on-year rises - resulting in an overall 130 per cent increase since 1997 - French property prices have, for the first time, dropped by an average of just 3 per cent per square metre since December 2007, across a broad spectrum of French properties, and representing an average fall of 3 367 euros/m² to 3 316 euros/m² since mid 2007.

During the same period, the typical cost of buying a property has risen from an average 3.8 to 5.1 years of equivalent family income.

The sale of new-build properties declined by 27.9 per cent in the first  quarter of 2008 compared with the same period last year, with three departments (Limousin, Lorraine, Auvergne) showing reductions of 60 per cent. France's current stock of unsold new-build properties currently stands at 105 600 - an all-time record.

The result of all this is the well known decline in property sales. The decline has been exacerbated by fuel price rises (cost of travelling to work from an out of town location), costs of labour and materials required for building and renovation, rising interest rates, and the inability of many tenants to pay higher rates making buy-to-let less attractive.

In addition, the decline in property transactions is influenced by the fact that 3 million properties or ten per cent of France's housing stock are second homes, and owners are not necessaily anxious to sell - for example, where the property is a recent inheritance and has cost the owners little except taxes and maintenance. Nor for their part are buyers inclined to spend on what is a non-essential purchase in times of uncertainty.

France also has a relatively low rate of owner-occupation at 60 per cent (compared with 70 per cent Britain and 80 per cent in Spain) and various recent government schemes to attract investors (through tax savings) and tenants (through controlled rents) have largely failed as too many properties were hastily built in the wrong locations, and sold above their potential investment value.

There are and never have been sure-fire ways to make easy money out of French property. Potential buyers, even in current conditions, will be lucky to negotiate 5 to 15 per cent maximum off the asking price, as many owners are either obliged or can afford to sit it out, waiting for the good times that everyone dreams are just around the corner. They are not.

Peter-Danton de ROUFFIGNAC www.francemediterraneanproperty.com

 

[Bob T]

I cannot understand why anyone who owns a house here would be too interested in house prices, unless they are intending to sell. I bought my house in 2004 and intend to live in it till the day I die. It makes no difference if it is worth 20,000 euros or 500,000, it is still a house that I like and love living here.

If people were to compare the house market with the car market then they would never buy a car as it is the one thing that will go down in price.

[suzy]

You beat me to it Bob !  My thoughts exactly

S

[woolybananasbrother]

Strange attitude you two have. Property values concern everyone who lives in France (or any other country for that matter) regardless of whether they are incomers or locals. They are very often a barometer of the health of the economy and, more important, of the morale of the population. And many many jobs depend directly or indirectly on the housing market.

And things seem to be getting difficult for so many people at present. So perhaps a little more concern for what is actually happening around you might be in order.

[Benjamin]

Three recent bits of experience in our part of France.

We were thinking of building a new house and selling this one but when taking into account the price of land, building costs and anciliary things such as landscaping the garden we decided that with the price we thought we could realistically get for our place then it just didn't make financial sense.

During discussions with a local agent he said that "recent" houses like ours (eight years old) with a top class bathroom and kitchen were still selling well but anything outside of that were very difficult to shift unless the price was low.

Finally we know a recent sale is going through but at a significantly reeduced price. The house, which needed quite a lot of renovation, was on the market at 175.000€ and was viewed by a youngish French couple. They got a local builder in and produced a devis for 40.000€ and offered 135.000€ for the property. The British seller was keen to sell and accepted.

[AnOther]

Noble and praiseworthy sentiments wooly however I think a similar attitude is probably prevalent for the majority of  Brits living here on incomes sufficient be insulated from the ups and downs of the French economy at large.

I'll refrain from further comment on the rights or wrongs of it except to say that I'm with both Suzy and Bob.

 

[suzy]

Wooly I agree to a certain extent, but I think Brits in particular are obsessed with how much their property is worth.  Unless you are moving on, it's only a figure in the air.  What is more concerning is the pound's value against the euro, when you have a fixed income.

S

[woolybananasbrother]

Yes, I too am concerned by that. But I have a feeling we may see a change soon.

[Val_2]

Not a lot moving in my neck of woods which is a very popular tourist and retirement area. Some houses have been for sale for over two years now and still not shifted or the prices dropped by an attractive amount so greed is still there in both vendor and agent. Salaries have stagnated here in Brittany and several large well known names in the food industry namely Doux volailles for one have just laid off hundreds of workers in a couple of communes in Morbihan as they are shutting down and weekly there are layoffs all over the region as the cost of living increases bites in the system. Young people are renting more these days until one day when they can afford to get a decent loan and build their own place and France always has been a renting culture more so than the UK as people move about more for work.

[Bob T]

I also live on a fixed income from the UK and have seen that drop since 2004. It is an RAF pension that does not increase year by year with inflation. I get friends from the UK visiting and asking how we manage on the money, but it is enough to live on. I tell people that I am a time millionaire and that time is something that money cannot buy.

I don't need to spend my time buying the latest and greatest as what I have will last for a long time.

I had an interesting conversation with a friend last week. he had bought a new PC and asked me if I would come over and set it all up for him. After a few hours I left with a few bottles of wine. He told me that there was a great demand for computer work within the Brit community here and that I could make 30 euros an hour. The problem is that I would be selling my time for money and that would stop me sitting in the garden watching the wildlife. I don't need any more money, and I don't care what my house or car is worth.

I can understand that there are people who need to earn, but why waste life trying to earn more than you need to be happy? If you think that money brings happiness, then think again. Once you have enough to live on then anything more is a waste.

[sid]

Excellent post, Bob, and my sentiments exactly!

Sid

[Just Katie]

Yes that is an excellent post.  It reminds me of the millionaire who bumped into a lay about on the beach.  He said that such a young man should get work.  The layabout replied "why",  well you know the rest.  The millionaire told him he could then afford to retire and travel to lovely places such as this beach.  The layabout smiled.  The ultimate time millionaire.

The housing market affects different people in different ways and Bob and Suzy must be in enviable positions to make such comments.  My thoughts go with those trying to sell and move back to UK for whatever reason and also for those relying on incomes linked to sterling.

[AnOther]

I'd be right there with you Bob but for the fact that we both have existing health issues and being still some 5 years away from an E121 really can't afford to pack in the job, and importantly the private health cover which goes with it, until we've got our 5 years in so to speak [:(]

Nearly 1 down, 2 to go followed by 2 more on an E106 and we've cracked it [:D]

 

[Bob T]

Ernie, I do understand that there are people who need to work, but the point is that you have a job and earn money that is fine. You live in your house and would it make any difference to you on an individual level if your house was worth 20,000 or 500,000 euros, you would still need to work for your income to live on.

I was lucky in that I had an E106 in November 2004 when I arrived here and am still in the system. At 49, I am not entitled to a E121 either, but what the heck I am not going to worry about it - there are too many butterflies to watch and lizards to study!

[Jacqui Too]

[quote user="Bob T"]You live in your house and would it make any difference to you on an individual level if your house was worth 20,000 or 500,000 euros, [/quote]

I appreciate that it does not in your case, but to a lot of people their homes are their investment for there old age, they can use that value and downsize to live more comfortably when pensions are not enough to live on or the exchange rate is against them. Property value is very important to me, we have no pension other than the state, we have invested all our married life in property, after starting off in rented, we now are sitting very pretty thanks to the property boom of the last couple of decades and some good buys, even in a recession of the early 90's we could not have foreseen the value of our properties now!

If you are happy with your lot and your future is safe, then I think it may not matter how much your property is worth, I hope one day to be in a similar enviable position and find somewhere to end my days and be happy but till then I shall keep an eye on the value of my house.