2010 FRENCH PROPERTY PRICES (August 2010)

FRENCH PROPERTY PRICES 2010 (updated 15.08.2010)

Local sales have shown significant uplift in July 2010 again mainly at prices below 200000€ although some sales have been achieved in July above this level for the first time in many months. Whilst early to determine whether this trend will continue it is interesting to note it reflects perhaps a return to common sense from sellers and a reality check for buyers that the market is at the bottom, how long it will stay is not predicatable, with most seeing a slight increase' in price going forward. Enough to say that the purchasers have been around for some time and are now choosing to buy. Early August saw this continue, however it will not be until the end of September before we can state this is a return of some confidence to the market. The recently announced economic growth figures for France, the UK and Europe will certainly not hurt in the short term.

In the national figures, FNAIM surveillance of the market shows a minor fall year on year according to the Midi Libre newspaper (July article), with a stability overall in prices being achieved throughout France. Regional variations are occuring and significantly the Languedoc despite population growth figures still showing growth and movement of families and individuals to the region, some areas are still showing slight falls year on year in prices. The latest figueres show an increase overall of 3% nationally with a fall in the Languedoc of 0.7% year on year. This reflects some return of stability but activity levels are still low compared with normal periods. Previous sales activity, which has seen more purchases at the bottom end of the market, in the Western Herault over the first months of 2010, has now lessened, bringing fears of a 'second wave' of price falls, amongst professionals for the autumn of 2010. 

There is some evidence at last of overseas buyers returning to the market.

As stated previously we believe a level playing field locally is becoming more apparent in the Western Herault. Buyers are becoming more fixed or determined to achieve a good price, however, where some sellers were previously needing to sell, the need for them to sell quickly, perhaps due to a loan situation or personal circumstances, is becoming less apparent. This is leading to them becoming more determined to hold out for a more favourable asking price. Perhaps in this sense we have seen the bottom of the market, or if not it will not remain this way much longer unless of course the feared 'second dip' recession does arise; as stated already we will know more by mid October when we have measured the September figures for sales.

Reality will prevail in the form of the market - if you are realistic about the price of your property for sale you will find a buyer quicker than someone who is unrealistic - as the obviously overpriced properties stick! Asking for prices when the market has fallen 30% in the last two years is unrealistic. And certainly we would not expect prices to recover for some years to those of two years ago ie end 2007 beginning of 2008 when prices were at their premium. 

There is some evidence that  certain types of properties are becoming scarcer although by normal market standards there is still much more than normal available. However it is the lower end of the market if any that is seing interest from possible purchasers, although some of those are being surprised by how firm sellers can be when they believe there property represents good value, even in this market.

We come across sellers who believe the market should return to them any investment they have made in their property, whether it to be build new or renovating a house. Let us be frank, unless you are prepared to expose yourselves as unrealistic to others(some would say foolish or worse) who are very aware of the state of the market, those asking for prices based on two years ago will not achieve it, and run the risk of having the property on the market for some years, not unusual in France. Similarly those expecting every seller to drop the price to the price they believe is appropriate are also finding it more difficult than they imagined. There is little doubt prices are finding the bottom with some return of marginal increases in low priced homes below 100000€.

Those looking to invest in new build or renovation should look at a minimum of 15 year time frame to recover returns (and escape capital gains taxes on second homes) and longer if possible. Also when buying please remember the larger towns and village with more facilities will always command higher prices than those in the surrounding countryside, another factor often forgotten by sellers.

We are also aware that the government in France will introduce significant new legislation from 2011, some due to Europe, which will make selling and buying a more laborious process for all.