Well, while even the RICS are predicting further dramatic price falls in the UK the forecast over here is
not as gloomy. The FNAIM say that prices are stagnating in response to the banking crisis and tougher lending criteria. A far cry from the 40% falls predicted by some in the UK and elsewhere in
Europe. Here in France such predictions are incorrect, not only because the forecast reductions in French property prices have not materialized, but also because the predictions do not give
sufficient consideration to the differences between the French property market and other markets. The reality is that property prices in here are relatively stable; in January of this year they
increased by 0.6% compared to the previous month and for all of 2008 the total reductions was only 2.5% , following an increase of 3.8% in 2007 (all figures from FNAIM, France's federation of estate
Like all markets, the global economic issues have reduced current demand for property and houses, both locally and by international buyers (a significant part of French property is bought and sold by nationals of other countries). However, this has not resulted in falls in the French property market. One reason for this is that property is seen as a long-term investment in France, so many property owners are simply waiting for the market to pick up rather than reducing their prices. This long-term view is supported both by cultural preferences (we tend to buy houses later in life, when we are settled in one place, rather than as an investment) and by financial considerations. An example of the latter is the fact that the cost of selling a house (in terms of various fees and taxes) here is extremely high (typically 10% to 15% of the price) so it only makes financial sense to purchase a property if one intends to hold it for a considerable period of time.
Perhaps more important is the fact that the supply of available housing here is relatively stable. In the USA, UK and Spain the large-scale high risk mortgage lending (the so-called sub-prime mortgage market) has resulted in corresponding large-scale mortgage defaults and forced sales. These defaults and forced sales have depressed the property market, resulting in further defaults and forced sales. Consequently, these countries have experienced a huge number of properties being sold at whatever price is offered. That situation does not exist inhere, as bank lending has been far more conservative and traditional, not only in terms of avoiding high-risk lending but also in terms of requiring substantial deposits and insurance.
A third factor is that France has not experienced the same level of price inflation as other countries. Consequently, property prices have not reached the unrealistic levels seen in UK and Spain and therefore are better supported by fundamentals (e.g. underlying construction or replacement costs).
These factors put us in a very different position from USA/UK/Spain in terms of its property market. Consequently, while we have seen large and rapid price reductions in these countries, it is unlikely that the same will occur here.
From our perspective, as independent property advisers, it seems that when times are tough people look for safe and reliable homes for their spare cash. The days of seeking a bargain in Eastern Europe (or even further afield) are well behind us just as seeking an extra percentage point from an Icelandic bank is not going to happen again for a while (isn’t hindsight a wonderful thing).
As usual we’d caution that “location, location, location” means as much here as in the UK and even more in a buyers market than the sellers market we saw at the turn of the Millennium.
Choose the area that you are interested in and research it as thoroughly as time permits.
If you don’t have the time or money to fund this research then retain a professional property finder to scour the local market for you and help you buy at the lowest possible price. Whether you are looking for a bargain in Brittany or Normandy, a chateau in Bordeaux or a chalet in Chamonix you will find that having someone with local knowledge can help dig out a gem that you simply wouldn’t find yourself.
One of our recent clients can sum up the benefits better than us:
"I found myself looking forward to coming home from work to find an email or a call with updates on the search, rather than the prospect of an evening of un-focused internet searches and then wasted visiting trips. I was so busy and it took off such a lot of pressure.
"It felt like somebody was on our side, who knew the area, was really focused on what we needed and had got it all distilled down into a couple of days highly organised viewing days where just about everything we saw fitted the brief.
"In the grand scheme of a property purchase, the fee is barely noticeable and for the reassurance it provides, cutting out the risk of making a mistake and getting the right price, it’s without doubt excellent value for money. I’d have no hesitation in doing it the same way next time."
The advice then is to look carefully at our property market as a sensible long term home for your money. The added bonus is that rather than receiving a cuddly toy or leatherette folder as a “freebie” you get sunshine, great wine and a relaxed way of life thrown in.