A marked increase in the volume of transactions has marked the second
quarter of 2009. Most of the demand has been in the lower end of the market
but as the quarter has evolved the value of transactions has been creeping
up. Although sentiment with sellers remains fairly gloomy some of the best
value on offer is being stripped out of the marketplace.
Our observations are based on the South West where we are finding
numerous French buyers moving down from the North of France motivated
by the climate and the quality of life to be found in the area.
There has also been an increase in the levels of English purchasers,
many who have managed to sell properties in the UK. We are finding that this
sector of the market have trimmed budgets dramatically to compensate for the
weak sterling and concessions that they have had to make when selling in the
UK.
There are also increased levels of demand from other European countries,
notably Switzerland and Belgium with purchasers attracted by the levels of
value on offer. There is also some demand from the Scandanavian region.
Overall the market is looking far healthier than at the beginning of the
year and it would appear that property values have stabilised for now.
2009 - First Quarter
The first quarter of 2009 has been marked by dramatically lower levels of
demand from international clientelle matched by sharply lower levels
of transactions with local purchasers. This has had a dramatic effect on
sentiment and prices have been dropping accordingly. Supply of property
remains plentiful and pressured sellers are being forced to drop their
expectations by as much as 40%.
2008 - Last Quarter
The last quarter has been marked by more sober sentiment as international
financial events take effect on the national economy. The French market has been
remarkably resilient until now, although, with the current mood, prices have now
begun to edge downwards. There are still high levels of stock at mid-range
values although we have seen sustained demand at the entry level of the market.
Many British buyers are holding off until the economic outlook improves, but
as usual when this day comes, it will also become more difficult to find the
deals and negotiate the terms that are currently available.
Banks have been actively looking for business and although lending conditions
are strict it seems as if there are funds available to borrowers.
2008 - Mid year
Credit crunch, weakening pound, and stagnant property market in the UK have
all had an effect on the confidence of UK buyers into the French property
market. None the less, we find that there is still a healthy volume of buyers
prepared to bear these conditions and who are sufficiently motivated to find a
home in France. Lifestyle continues to be the principal motivation. On the
positive side for purchasers there is still a generous supply of property and as
a result there is both choice and value to be found in the market.
The French market is still active and we are seeing an influx of buyers in
the South West from both Northern and South Eastern France. The impact of the
Credit crunch on the French market has been relatively slight. This is largely
due to the controls on borrowing which are imposed by law. Borrowing periods
continue to extend with the average mortgage period now slightly over 21 years
and many new mortgages being offered over 30 years. We expect to see the gap
between English and French property values continue to narrow through the year.
The French market is officially still growing in value at a rate of 2,7% per
annum.
With the current insecurity in banking circles and financial markets we
expect growth to remain fairly flat through 2008. We have concerns that there
will be some instability in the buy to let market in areas where supply has
outstripped demand.
Market report end
2007 beginning 2008.
The year ended with supply of property remaining high and level of demand
steady. During this period we have seen sustained demand for quality properties
in the 5-800 000 euro price bracket and within this range supply has easily been
met by demand. Overall the market has measured growth for 2007 at 3.8%, slightly
below the predictions we made in 2007. This is in part due to changing
expectations from sellers concerned about the unsettled financial markets and
fallout from the credit crunch in the United States.
Pricing
We have found sellers to be far more realistic about prices and have been
able to renegotiate numerous mandates to reflect this mood. This has resulted in
a greater proportion of properties we have for sale being offered at fair market
value, thus providing purchasers a wider choice than has been common in recent
years. In addition, a some English sellers have been ready to accept a reduction
in asking price when repatriating the capital as they have been able to benefit
from the stronger euro exchange rate.
Market conditions - first half 2007
Market conditions have remained relatively steady coming through the first
part of the year with the French property market having been tempered by caution
preceding the presidential elections. The new government is now looking to
encourage homeowners and tax breaks have been provided on interest payments on
principal homes. There has been talk of principal homes being exonerated
from ISF. These factors are expected to have a positive influence on the market.
Dispensable household income is on the increase. The supply of property on the
market remains high however and will help to temper excessive growth. We
currently expect house prices to rise around 6% through 2007.
2001 average prices realised : 1 296 euros / m� in the SW.
2006 average prices realised : 2 025 euros / m� in the SW.
Average across France for the same period 2 581 euros/m�
2006 finished the year showing a growth of just over 7% for the year. (Source
FNAIM).
The most
expensive areas included the
(�le-de-France, Provence-Alps-C�te d�Azur, Rh�ne-Alpes, Aquitaine,
Languedoc-Roussillon) and most neglected included the (Limousin, Auvergne,
Franche-Comt� and Lorraine) where bleak
economic outlook, a lower quality of life and less social and cultural
infrastructure were cited as the main contributing factors.
The supply of properties for sale remains high in the latter part of the
year. Following a wave of articles expressing a negative outlook for the market,
sellers are currently realistic with regard to the pricing of properties. We are
concerned that this trend will not last for long. We have found there to be
substantial movement of property at all price levels going in to the last
quarter. I am convinced that there is a window of opportunity for
purchasers at the moment as I am expecting market prices to surge upward in the
early part of 2007.
