Slow down in the French property market

The first thing that should be said about the French property market is that there are not generally the type of large increases in property prices as experienced in the UK. A common question from British buyers is how attractive the French housing market is for investors looking to see a good return on their investment, and the stock reply is normally that it is difficult to make a quick killing, as price increases are normally between 5% and 15% per year, and once you have taken into account  profit tax, purchase fees etc there is little room for any great profit. There are of course exceptions – certain areas are ‘up and coming’ just as in the UK, and occasionally there are bargains to be had.

So bearing this in mind, the recent slow down in property prices means that if you are looking to buy in France then it should be because you want to live there rather than buy for investment. Add to this the fact that the Pound Sterling is at an all time low, and you might even consider postponing your purchase if at all possible. About 40% of the property market is in rentals, so it might be an idea to explore this sector before spending your hard earned cash. It also has the added advantage that you could rent in the area of your choice, get to know the market as a resident, and possibly find the house of your dreams through insider knowledge.

 The Royal Institution of Chartered Surveyors 2007 report says that overall last year prices saw a modest rise of 4%, though Paris did a little better. Significantly, however, it seems that nearly all those gains were in the first six months.

The RICS report found the slow down somewhat surprising given the strength of the French economy, and the fact that  President Sarkozy’s has said that he intends to boost demand with tax breaks. It does however cite several reasons, including ‘a slowing economy, rising interest rates, greater credit constraints and weakening consumer confidence’. 

‘It might be the case that more people are opting to rent than to buy whilst house prices remain so high in comparison to several years ago and future values seem uncertain at present,’ says the author.

The overall increase in the French property market for 2007 is a modest 3%.