Current situation (February 2009)
Although house prices, house prices have seen) by the dramatic decline recently in some countries (eg U.S. and UK prices are relatively stable in France. Indeed, in January 2009 there was a slight increase (0 , 6%) compared to the previous month. In addition, in 2008, declining prices FNAIM of only 2.5%, not even the 2007 increase of 3.8% (data to be offset, 'French National Association of EstateAgents).
Unlike some other countries (eg USA, UK, Spain), France is not facing big price reductions of property. Instead, we have seen over the past four years, a reduction in the inflation rate home last year with a modest reduction in prices. The predictions of many a major French real estate prices fall in 2008 were later proved false, and forecasts for a sharp drop in 2009 probably will be just as wrong (see the rest of this articleDiscussion).
French property price stability
Historically, France has relatively stable prices. Every year property may increase or decrease a little, but traditionally the prices in line with inflation, both of which were medium to long term. From 1999 to 2006 there was a change in this traditional model, but are now market fundamentals reassert themselves and the French property market has normalized itsBehavior since 2006.
The expectation that this will be followed by a period of deflation in land, are largely based on the experience of other countries (like Great Britain, USA and Spain). However, these forecasts do not take sufficient account of the main differences between these markets and the French market. First, inflation was much lower in France than in other countries, real estate prices have not reached beyond the FrenchThe levels found elsewhere and are therefore subject to much less pressure.
Limited real estate speculation
In France, property investment is generally much more conservative than in other countries. The properties are purchased rather than long-term investment for a number of reasons:
Historically, France has had a stable housing market, rather-bust trends elsewhere for the boom. Consequently, there is no perceptionProperty can be used for fast or easy to make money. Instead, it was purchased for personal use, often later in life when one is, and intends to remain in the same place for a considerable time. Alternatively, you bought as a long-term investment.
The cost of buying and selling of real estate are relatively high in France, the broker usually charges double or even triple, that the British were in that, while taxes and property taxes Notaire can consume 10% of the price.As a result, the price of a property to increase up to 15% just to cover expenses, so you have a property for a longer period, to maintain their profits.
The French banks have substantially more conservative lending practices elsewhere. A substantial deposit is normally required (which is in contrast with the mortgage of 100% in the UK the opposite direction), such as insurance, to ensure repayment. For large-scale loans for borrowers with high-risk (as in the U.S. sub-prime mortgages foundMarket) was found to be not in France.
This conception of property as a long-term investment that adds both owners and banks, a remarkable stability in property prices. In the current economic crisis that France is not a large number of high-risk borrowers is the most important. In the U.S., because the economic situation has declined, many borrowers have their loans in default, and then forced a great number of property sales.These foreclosures reduced property prices, what more to more defaults and foreclosures. Thus, the United States, we see a sharp increase in the supply of goods, while demand for goods is reduced because of economic problems. The sharp decline in the U.S., Britain and Spain, property prices because of this imbalance between supply and demand.
Although France, like all countries, the speculative real estate purchases and mortgage is in default, the levelsmuch lower than in other countries for the reasons explained above. Therefore, he saw a strong increase in the property and is not an expert in property price issues found elsewhere.
Real Estate Question
Although the French property market is largely free from the problems elsewhere in relation to property speculation, loan defaults and foreclosures, it is suffering from a significant decline in demand. WithinFrance, the decline, this is partly due to economic and partly on people hold back purchases due to lack of confidence in future economic conditions.
There is also a very significant decline in purchases of property by foreigners. In part this is due to the global economic crisis, resulting in financial difficulties and concerns. However, fluctuations in exchange rates also play an important role, for example, the decline of the pound sterling from its historicalaverage of 1.5 € / pound is equivalent to the current € 1.1 per pound, the French property is now much more expensive for buyers in the UK. Moreover, in addition to making the most expensive properties, which are subject to UK income those that make changes in exchange rates, the cost of living in France is much higher than a year ago. Finally, for those who sell their goods in the UK buying a French property fund would lead to a fall in house prices in the UK that have less money.Similar difficulties are faced by potential buyers from the United States and a number of other countries.
Although the decline in foreign buying has only a limited effect on the global market, has a disproportionate effect on certain types of property in which the foreign purchaser of a significant segment. These include personality traits and high-end properties in areas (such as farm Restoration, palaces needed), especially by foreign buyers (eg, Provence) encouraged.Consequently, the significant reduction of foreign customers to this type of property loss contributed more than the market average (in some cases reduced from 20% to 30% above the average market decline of 2.5%).
Outlook for 2009, 2010
The entire French property market should remain relatively stable. Overall, it is likely that there are small decreases in the next two years, though it is months to raise prices (egJanuary 2009). But in the real estate sector, where foreign buyers have a significant impact, the prices are still very depressed until the international economic situation improved.
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