house prices in France

[Mr Coeur de Lion]

Regarding the exchange rates, we're loving it at the moment. With most of our money in Australia, the exchange rate is finally being kind to us and we are getting more euros for our dollar. It's been about 0.57 euro to $1 for ages now, now we get about 60 centimes for every dollar! Compared to that, the sterling to euro is still brilliant (you get more euros for your pound, we get less euros for our dollar).

[PaulT]

[quote user="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!
[/quote]

Well Bob, I can understand just wanting to sit in the garden and admire the wildlife. What I cannot understand is what you will do once your E106 has expired and your non increasing RAF pension does not provide enough to live on.

Money does not buy happiness but without it we cannot live.

We had planned to retire to France next year when I am 57. Then came the healthcare changes. However, even if they had not our plans would have been put on hold due to the exchange rate.

Someone posted on here a while ago that they were starting to get worried - they had worked out the financial viability of relocating to France on an exchange rate of £1 to 1.30 euros and, at the time, the £ was heading towards the 1.30 euro mark. Now, it is well passed that point.

When we bought in France we got in excess of 1.48 euros to the £. If we had been planning to buy now I think we would be having second thoughts. I am sure a lot of Brits are holding off buying meaning that houses will not sell unless the prices drop drastically.

Retirement for me is now 60 with us buying a place in the UK to keep our residency by also staying in excess of 6 months a year. The rest of the time will be in France.

Come 65 and the magic E121 we will relocate to France for an even more comfortable life as I will have a greater pension and my OAP pension will have kicked in.

Paul

[Bob T]

P2,

The E106 only lasts for 2 years and it expired in Jan 2007 - before all the changes. The RAF pension will increase when I am 55 and my civil service pension will kick in when I am 60, so it was all well planned. I will be 50 in 3 weeks time.

The point of the post was house prices and the point that I made was that as a house owner who does not intend to sell the house, the value has no interest. Even if I had no health cover and my pension was reducing because of inflation and the state of the pound, then the value of my house would be of no use to me for a monthly income.

I also got an exchange rate of 1.49 when we bought in 2004, and now it is 1.26, so in pounds my house may be worth more, but that makes me no better off as we are not selling.

As I have said all along it is not good news for those who intend to use the house as an investment, but in day to day living for those of us who use a house as a place to live, the value makes no difference.

Coming to live here is all about planning beforehand and it has become more difficult due to the changes in the health system, but that is another matter.

[Turnip]

Having sold our UK house in July 2007 we are renting and watching the house prices fall in France before buying there.

It was pure luck that we sold when we did[:D]

[Frederick]

I was told last month as far as the South Vendee is concerned for every person  on agents books looking to buy  there are  five times as many houses up for sale ......There are quite a few signs out in our village at the moment  more than I have seen for sale in the past 4 years and where I am is supposed to be place people want to be and they normally go quickly ..

[Judith]

Whilst I realise that things are gloomy, the constant media "downing" only creates a circle of despondency.  As in all cases, there are exceptions.  Two houses in our village in France (large ones) sold last year to English people though one took some time to sell as I believe it was very overpriced. There are at least three other smaller village houses which are stilf for sale from about the beginning of the year.  They are much less attractive properties, though not on the main road as the others are.  In the next village, at Easter there was a large house for sale, on my visit last week I see it is now a Gites / ChdH.  In London, our flat which we are in the process of selling had so many offers, I could take my pick.  All offer price and above.

As in all, houses which are well situated and well priced will sell.  Those which are not well situated and over priced will not. 

The English whether they be in France or in England, tend to have a peculiar fascination with the price of property.  The French like to sell to the British as they think they can get a higher price.  Other than that, they seem less obsessed with the actual price of property.

Like Bob, I've always bought a house to live in rather than for an investment, and though the increase in price since we have owned the London property has been useful, now we come to retire, we did not buy it for that but so that we had somewhere to live close to our work.

[Sprogster]

Judith, the flaw in the belief that houses which are well situated and well priced will sell easily, is if a prospective purchaser cannot raise a mortgage. The unique crisis affecting the property market at the moment is being driven by the credit crunch, where even borrowers on six figure salaries are struggling to find a mortgage, as the banks simply don't have the money to lend. 

This is what is driving down prices and until the credit crunch eases, which most economists forecast could take a couple of years, the most likely scenerio is for property prices to continue their decline by up to 30% from current levels.

I think you are sensible in selling your London flat now, as areas like W1 have so far been fairly insulated by the continued interest of foreign buyers buoyed by the weak £ and the wealth generated by the City of London. However, with significant job losses expected in the City this Autumn the market could rapidly change.

[Gastines]

Ref falling house prices, obviously location must be the biggest factor. Had our eye on a wreck up the road,small house needing new roof and complete redesign and interior rebuild, but with a view down the Rance,albeit when the tides out,the muddy end. We thought tops 250.000euros,SOLD first day offered at 415.000. We won't be moving in so on to plan F.

Regards.

[bigears]

Hi

I agree with the last post.  I have talked to people recently who tell me property values are dropping in australia and nz as well.  We in developed countries are in for a rough ride for the next couple of years, it's anyones guess how bad it will get.  The only time I considered the 'profit', we had in real estate was when we retired as we had to reorganise our lives.  The sooner we get back to 'houses are for living in', the better. 

For our part, we have two and a half houses that we are keeping for the foreseeable future, they all have family members living in them.  I am not saying that real estate prices are not of interest to me. Due to my age I have seen recessions (albeit in the uk) before and have witnessed the recoveries.  In a booming market, uk house prices can surge, so think long term.  Anyone having to sell in france, uk etc will have to take a reducing price, perhaps they will be the odd exception.  Surely most of the french marke needs the brits to be buying for prices to be bouyant.

 

[ams]

30% seems to be a very large drop that you are expecting. Looking at the new and realatively new houses on the market I can not see how they can fall by up to 30%.

 

The price of the raw material to produce a house has continued to rise month on month and year on year, therefore it is reasonable to assume that the material cost will not fall.

 

The price of transporting the material has gone up by 50% in the last couple of years.

 

The leagal and government cost are unlikely to fall.

 

The labour cost is unlikely to fall by 30%, in fact I expect it to keep pace with inflation.

 

That leaves the cost of land for building. In this area I can see the potential for cost reductions. However one has to look at the location of where the new houses will be built. Near the coast, not likely, near major town again unlikely, in fact I would expect prices to rise due to the high cost of transport to work. Thus the houses most likely to fall would be those built in the countryside.

 

I feel that certain parts of  the markets (new houses less that 5 years) will drift lower, however the flip side is that rents will climb to meet the needs of those that can not get credit due to the adverse financial markets. To this end the Government have introduced legislation that will help the rental market. Some of these are as follows,

 

1. Reduction in the caution required from two months to one month.

2. Making it illegal to demand or even ask for a guarantee from the potential tenant.

3. Introduction of a guaranteed rental scheme to protect owners.

4. Enforcing new legislation that ensures that owners of property can no longer get away with not paying tax habitation on empty properties.

Just some ramblings to further the discussion.

 

ams

[mint]

ams, I am sure you are very knowledgeable on these things and I am the first to admit that I am not.

But, do you really think that the price of proprety bear such a close relationship to the "cost" of it, eg the price of materials, etc that you name.

I am thinking that, even for insurance purposes (particularly in the UK), your house can be valued at far greater or far less than the market value.

Surely the old adage applies, something is only worth what someone else is prepared to pay for it?

[ams]

For new houses yes, for other houses, so many possibilities. If new houses as defined in France as being less than 5 years old, fall below cost level, then no now houses would be built. ! If it were to happen it would not last long. IMHO

 

ams

 

[chessfou]

Of course, Sweet17 is correct (vis-a-vis ams).

Markets are not logical - for instance, at the moment (and this applies even if oil prices drop by 50%) it is cheaper to drill for oil on the Bourse, the LSE (not the one that awards degrees) or Wall Street than it is to drill for it in the ground. Houses are no different - sometimes they sell for "more than they're worth" and sometimes less (where "more" and "less" can be a million miles apart).

My own hunch is that house prices will drop (peak to trough) by more than 30% in UK, Spain, Ireland, USA, Australia ... but by less than that in France (in general; any areas relying on foreign buyers, especially British and Irish, can expect bigger falls).

Of course, if you have bought, none of this really matters. On the other hand, if you are renting from a bank (a.k.a. "bought" with a mortgage), then it might. If you are renting from a normal propriétaire (as are we) then you can (probably) expect rents to rise slowly (in line with the French index).

[ams]

http://www.propertymagnate.com/articles/Article/French-Property-Market-Overview-May-2008/34024

 

ams

[mint]

Just goes to show you can't believe anybody and that your guess is as good as mine!

[Judith]

[quote user="Sprogster"]

Judith, the flaw in the belief that houses which are well situated and well priced will sell easily, is if a prospective purchaser cannot raise a mortgage. The unique crisis affecting the property market at the moment is being driven by the credit crunch, where even borrowers on six figure salaries are struggling to find a mortgage, as the banks simply don't have the money to lend. 

I think you are sensible in selling your London flat now, as areas like W1 have so far been fairly insulated by the continued interest of foreign buyers buoyed by the weak £ and the wealth generated by the City of London. However, with significant job losses expected in the City this Autumn the market could rapidly change.

[/quote]

Thanks Sprogster, though the decision to sell was taken because of my unexpected redundancy (so I get to move to France sooner than planned), rather than it being a good time to sell.  As it turns out, it might have worked out for the best.  I agree that the central London market has so far been protected (especially where we are), and that the mortgage situation is the real problem.  But if everyone hadn't tried to get the cheapest fixed deal over the years, and the banks had kept to sensible lending criteria, we (and they) would not be in this mess.

I purposely did not accept the highest offer - I went for someone who I knew had the money (albeit on a mortgage, but confirmed).  Still to exchange, so keeping fingers crossed a bit longer, but it should be soon now!

[ams]

http://www.anil.org/guide/calculs/insee.htm

Shows how cost of constructing a new house have moved over the past couple of years and the last year on a quarter by quarter basis.

 

ams

[bigears]

hi

If I had some spare dosh, I would now be looking to buy a property in the UK at auction.  Looking at auction selling prices for reposessions against previous sale prices (where indicated) is a real eye opener.  My bet is that in ten years time a wise buy now will be a good investment.  Its important to catch that surge in UK prices when it happens.  We had a house valued in the NW of england in 2001 when we remorgaged to buy our french house, and actually sold it in dec 2005 when we downsized, it had gone up by 90% on the previous valuation.  Its suges like these that I would like to benefit from.  An english couple we know currently living in France, had a similar property in the UK but in a different area, they sold it before that surge for a move to France, so missed out on that huge increase.  They are now wanting to go back to the UK, but are finding that their french house cannot be sold for a sum that would buy them even a very modest house in the area of the UK they want to return to. 

I personally, even if we decide to move 'full time' to france, would always keep a 'foothold' in the UK property market.  Perhaps I am wrong, nobody knows, the UK property market may in the future change and not behave as it has in the last twenty years.

Judith good luck, hope completion goes smoothly.

[chessfou]

[quote]Perhaps I am wrong, nobody knows, the UK property market may in the

future change and not behave as it has in the last twenty years.[/quote]

Nobody knows but I doubt very much that human nature is going to change any time soon. The UK property market will surely continue to yo-yo: 20 years ago* was just about the peak of the market which was followed by a sizeable crash (ca. 1989-1995), bumped along the bottom a bit (1995-1998), then another huge hike (1999-2006/7) and now we're (or, rather, you're) on the downslope of the helter-skelter again. When it again reaches bottom (2012/13??) it will splash through the water for a bit and then presumably rise again like a phoenix (out of water?).

* and 20 years before that was about the start of an enormous boom (until 1973/4), followed by a big bust (largely hidden by huge annual RPI inflation of 20-25% p.a.) before prices edged up again and then there was another bust (rather mild) about 1980, then they bumped along the bottom for a bit before prices took off again ca. 1985.

Of course, such helter-skelters are absolutely normal for the price of anything - land, houses, food, oil, wine, postage stamps, antiques, art, ... Even if it is your home, aim to "buy low, sell high" rather than the other way round.

[Judith]

[quote user="chessfou"][quote] (1) Perhaps I am wrong, nobody knows, the UK property market may in the

future change and not behave as it has in the last twenty years.[/quote]

.....  (2) Even if it is your home, aim to "buy low, sell high" rather than the other way round.

[/quote]

1) Yes - I remember it well - all those times you speak about ..... usually bought at the height and sold at the low because of ...

2) Which is fine, if we were talking about non-necessitites, BUT,

sometimes houses have to be sold at times you would not choose (job

move, divorce, death, to name but three reasons I can think of quickly), and

people's circumstances do not usually move in line with markets, as mine haven't.  C'est

la vie!