French property sales have risen 7.7 per cent in the last year, topping the record set in 2006.
After a very bullish year in 2016, and as announced by the Notaires de France, sales of older properties continued to rise in February 2017, totalling 867,000 – up from 805,000 12 months earlier and topping the peak figure of 837,000 in May 2006.
This rise, however, should be put into perspective with the rise in the number of dwellings in France. Although total sales rose by 19 per cent between 2000 and 2016 (34,537,000 in 2016 against 28,988,000 in 2000), sales of older properties over the same period rose by only 7 per cent (793,000 in 2000 and 848,000 in 2016), well below the 940,000 transactions that would be needed to achieve a “record” turnover rate.
However, the steady rise in sales since February 2015 shows that the market, buoyed up by buyers (who, it would appear, have not adopted a pre-election wait-and-see attitude), has achieved what the Notaires describe as “cruising speed”.
Indeed, mortgage rates continue to be at historic lows, and even though they are starting to rise, buyers are taking advantage of the favourable conditions while they can.
The tax relief offered by the recent Pinel scheme undoubtedly stimulated investments in new builds, and this tax concession has been extended until December 2017, which is expected to continue sustaining market activity.
The number of home loans rose sharply in 2016. Interest rates remained low for many months running, thereby fuelling the rise in sales and the turnover rate on the property market; with vendors reinvesting the proceeds of their sales simultaneously or virtually simultaneously in a new property.
Agents are certainly optimistic about the year ahead, with Trevor Leggett, Chairman of Leggett Immobilier, welcoming the upbeat sentiment brought about by Macron’s win in the French election this year.
“We have already seen that he is trying to attract foreign investment into France and a growing economy will only help an already strengthening property market,” he commented, following the election result. “Don’t forget that in the last 12 months we have seen transaction levels rise by 7.7 per cent with 867,000 sales. This increase in the number of sales has heralded a steady rise in prices over the last year and we’re likely to see more of the same.”
Brexit is also brushed off by agents, with Leggett saying they have been “pleasantly surprised by how little effect the Brexit uncertainty has had on enquiries”.
“We average around 8,000 new enquiries a month and our pipeline is up by around 25 per cent on this time last year,” he explains. “For sure we have seen a slight decrease in the number of people looking to move permanently – some are worried by the uncertainty over pensions and healthcare. However, we’ve seen a big rise in the number of Brits buying second homes – our research shows that the driving forces are climate and value for money, both of which are excellent.”
UK buyers are forecast to make up around a third of all international buyers again this year, with strong demand continuing from American buyers and other nationalities.
“Last year we sold French property to buyers from 49 different countries and 2017 will be the same,” he adds.
French property sales to continue growing in 2017
3rd January 2017
French property sales are forecast to continue growing in 2017, as agents brush off dramatic headlines about Brexit’s impact upon British demand.
The UK’s decision to leave the European Union, voted for in June last year, has been the talking point of the real estate industry for many months and will likely continue to be for many more to come. This year, France follows suit with its own major vote: the country’s general election. Taking place after elections in Germany and Holland, 2017 could be one of equally notable political shifts.
Nonetheless, France’s lifestyle appeal remains strong, and estate agents remain confident about the attractiveness of real estate.
“We expect the French property market to continue growing – both in number of sales and in average house prices,” say Leggett Immobilier. “The Notaires de France forecast rises of 2 to 3 per cent and this seems a sensible prediction.”
Brexit’s biggest impact has been upon the pound, causing it to weaken against other currencies.
“Currency fluctuations have more effect on sales than economic or political conditions,” admit Leggett. However, the agency warns investors not to believe some of the dramatic headlines about the Brexit effect.
“Demand from the UK was as strong as ever in the first six months of the year,” explains the firm. “Since June 23rd we have seen a reduction in enquiries of 19 per cent but an increase in the ‘seriousness’ of these clients. Sales to British buyers dropped slightly in the second half of the year, but nothing too significant and British buyers still see French property prices as being incredibly attractive.”
Tim Swannie, director of Home-Hunts, which specialises in higher-end property, says it has seen enquiries drop from UK clients, either due to the pound or a general cautious attitude. However, the company has also seen a rise in buyers driven by Brexit.
“They want to make sure they own a property in the EU before the UK officially leaves,” comments Swannie.
“There have been two specific areas where we have seen a rise in enquiries from the UK: Paris and also the French Alps,” he adds. “The majority of these enquiries come from clients who work in Finance; some are looking to relocate closer to Paris or Geneva and others are buying for investment purposes, with a view to relocation in future.”
Swannie reports that the many clients are now shunning cash purchases in favour of taking out mortgages.
“Many French banks offer what is called a ‘back to back’ loan, whereby you can deposit your money in Sterling with them and then you borrow the same amount in Euros,” he explains. “This is a perfect solution to avoid taking a hit on exchange rates. Then, when rates improve in future, buyers can choose to pay off the mortgage.”
“The majority of clients at the moment are coming from mainland Europe, specifically Scandinavia, Benelux and also Germany” says Swannie, who also reports “a lot of interest” from Swiss, American and Middle Eastern clients.
Leggett has also seen a spike in demand from American and Scandinavian buyers, with overseas house-hunters drawn by the combination of low house prices and cheap financing. Indeed, mortgage rates have been at record lows in the last year, with Euribor rates remaining negative for 11 of the last 12 months.
One impact of Brexit is that the type of buyer looking for French real estate has altered slightly, with holiday homes more popular and the number of retirement property sales declining.
While the market’s performance will vary from region to region, owners are, crucially, said to be more flexible, which means that buyers have a chance to negotiate prices with sellers keen to close a deal.
“It’s certainly a buyer’s market at the moment,” says Swannie. “And with the uncertainty of Brexit still looming in 2017, and the upcoming general election in France, we expect it to remain that way into next year too.”Google+