One month ago, the majority of the UK voted to leave the European Union. While much has been made of the EU referendum’s impact upon the UK, how is it affecting French real estate?
France has long been one of the most popular destinations on TheMoveChannel.com, thanks to the country’s lifestyle appeal, while property prices have also fallen in recent years, further drawing overseas investors to the country.
While the outcome of the UK’s negotiations and eventual triggering of Article 50 is unclear, which makes the ultimate impact of Brexit hard to predict in the long run, France’s market is accessible to buyers both in and out of the EU, so UK house-hunters are unlikely to face any major new obstacles in the future. Uncertainty, though, can be a key factor in such a big financial decision. Since June’s vote, meanwhile, the pound has weakened against the euro, which has effectively made purchasing a home in France more expensive. Has that deterred buyers of French property?
In July 2016, France’s share of overall enquiries on TheMoveChannel.com dipped compared to June, albeit marginally, by 1 per cent.
Tim Swannie, Director of Home Hunts, who specialise in luxury property in France, says that enquiries from British buyers have reduced, which he says is “to be expected”, due to the shifting exchange rate.
Nonetheless, he says they are still getting “a good number” of British enquiries, even with figures down compared to last year. Indeed, on TheMoveChannel.com, France remained in the Top 5 most popular countries during June 2016 for the third month in a row.
“In the 3 weeks following the Brexit decision, we agreed 11 purchases…”
A more notable change since Brexit is the type of British buyers looking for property in France.
“One area where we are seeing an increase is from British buyers who want to relocate to France (rather than buy a holiday home),” says Swannie. “We are seeing this in Paris and the French Alps particularly, specifically from London-based buyers, who work in Finance and are considering a move close to Paris or Geneva.”
The agency is also seeing an increased number of retired Brits and British families, who are looking to relocate permanently to destinations such as Provence, the Dordogne, Languedoc and the Riviera.
What should British buyers do if they are planning to purchase a French home in the coming weeks and months?
“We recommend two things very strongly to our British clients at the moment,” advises Swannie. “Firstly, speak to a currency exchange expert because the markets are so volatile, it pays to get some expert advice and to get the very best exchange rates possible. Secondly, consider a mortgage even if you are a cash buyer. Interest rates are so low at the moment that it makes a lot of sense to borrow, get a fixed rate loan which you can always pay off in the future when the exchange rates are more favourable.”
Indeed, France’s mortgage rates have been at record lows in recent months, making the country’s real estate arguably more affordable than ever – and not just for British buyers. With the European Central Bank interest rates still at historic lows, banks in France are currently offering mortgages at rates as low as 1.3 per cent.
A global buyer’s market
According to BNP Paribas International Buyers, Brits led foreign investment in French property last year, but for Home Hunts, France’s appeal is increasingly diverse.
“British buyers now make up a relatively small percentage of buyers for French property,” says Swannie, “so, even if the number of British buyers does reduce, there are so many other nationalities that buy here each year it shouldn’t have a huge impact. At Home Hunts, at one stage British buyers made up nearly 60 per cent of our clients but that has changed a lot in recent years and they account for less than 30 per cent of our clients today.”
Home Hunts highlights a slight recent increase in Swiss, American and Chinese clients, as well as buyers from the Middle East, but they are “far outweighed by clients from the EU”.
As a result, the company remains confident about the year ahead, with the first half of 2016 marking the best since the firm first opened its doors over a decade ago.
“Enquiries in general are certainly not showing any sign of dropping off,” adds Swannie. “In the 3 weeks following the Brexit decision, we agreed 11 purchases for clients (ranging from 730,000 Euros up to around 6M Euros) and we are currently negotiating several more for people as well as carrying out record numbers of visits.”
While Brexit negotiations will continue to encourage and deter pockets of British buyers to hop across the Channel, for Home Hunts, the bottom line remains clear: with low mortgage rates and prices, French property’s appeal is the same now as it was before 23rd June.
“It is still a buyer’s market in France,” concludes Swannie, who says they are “very confident” about the year ahead.Google+