Purchasing properties in France
Is the French property market dying a slow painful death? Or is it so fragmented that there are still opportunities for the brave? This thread was originally posted back in September 2007 but just recently it has been revived with much discussion about the state of the French property market. There are a few very interesting points being made, not least the fact that more prominent areas such as Paris seem to have a different property environment and direction than those properties located in the smaller cities, towns and countryside.
Much is being made of the current economic meltdown in the US and the fact that the mortgage giants Fannie Mae and Freddie Mac are on the verge of going under in the US – companies which between them hold about half of the US total mortgage market. The feeling is that problems in the US are already impacting on property markets worldwide and things look set to get worse before they get better.
There is also a very useful recap of the French property boom for the period 2000-07, a time when many people enjoyed great gains and it was seemed easy to make money in the property market. However price movements in 2008 appear to vary widely across the country but on the whole French property prices are down between 10% and 30%, something which many forum members expect to get much worse in the coming months. The main concern of many is the stagnation of the market and the fact that buyers have disappeared and nobody is sure when they will return.
Summary
Those who follow France closely will be aware that the country is the most popular tourist attraction in Europe attracting literally millions of visitors a year. As tourism and accessibility are two main factors of any property market, France scores very highly on both of these points and these are two good reasons why French property has done so well over the last six or seven years.
However, with worldwide economy under great pressure there has been an inevitable reduction in tourist numbers (something which will get worse before it gets better) and money is becoming tighter across Europe and the world. The English holiday home market is also suffering with less Brits looking to France for a second home, partly because of funding issues, the market and also an array of property scams which have made investors very cautious.
While the French property market has some similarities with the UK market, in that Paris and London have their own property environments very different from those smaller cities, towns and villages, Paris seems to have held up a little better than London at the moment. However, with property buyers now affectively on strike, massive discounts available for the brave, the short term outlook is not good for the overall French property market.
One forum member mentioned the need for ‘capitulation’ in the property market before the long term growth pattern can be resumed. This is a very interesting observation and one which is common place in the stock markets of the world in times of trouble.
The french daily Le Monde reports on 20. 01. 2009 the following story. A couple from Lyon put their 73 sqm two bed apartment for sale last summer for 237000 euros. The best offer they could get was 200K, so they decided to rent the place instead for 760 euros. That's under 4% annual yield.
Now, let's see how do you invest 200K nowadays in the EU. How about going East, to the "new Europe"? 200000 euros buys you a 180 sqm three bed in Sofia, Bulgaria. Rental income? 1000 euros, to be conservative.
Bulgaria Investment Property for discerning investors.
I agree that the country is the most popular tourist attraction in Europe attracting literally millions of visitors a year esp Paris. Joanna Abdoh Paris France regarding Paris real est
The country is the most popular tourist attraction in Europe attracting lillions of visitors a year esp Paris.
what about prices in the rest of France and Spain? Any ideas?
There are a lot of Distressed Apartments Costa del Sol. One of Europe's favourite Mediterranean holiday regions, the vast Costa del Sol or 'Sun Coast' extends along the 161 kilometres of coastline from the Costa Tropical south of Granada to the tip of Tarifa past the Straits of Gibraltar, which is the door to the Mediterranean Sea from the Atlantic Ocean. Situated in the South of Spain it really does have something for everyone – sandy beaches, year-round sunshine, excellent sporting facilities and lively nightlife.
Spain’s real estate market has been hit hard by the global recession, with an estimated 1 million to 1.2 million unsold new homes on the market, many of them unfinished, according to Frédéric Mangeant, managing director of the real estate company Knight Frank Spain, which is based in Madrid.
The market for new vacation homes on the Costa del Sol peaked in 2004, much earlier than in the rest of the country, said Christopher Clover, managing director of Panorama Properties, a real estate company in Marbella, Spain. There are about 25,000 new unsold homes in the Costa del Sol region, he added.
In recent months there has been a wave of foreclosures, and large developments have not been spared. More foreclosures are expected, Mr. Mangeant said, adding that many banks are bundling foreclosed homes with financing to attract buyers. He estimates that prices have fallen 30 percent since the global market peaked in 2007.
Unfavorable exchange rates and a lack of confidence in the Spanish market are keeping foreign buyers away, according to Mr. Mangeant. However, the market for luxury homes is stronger, because wealthy buyers are less likely to need financing, and sellers can afford to hold onto their homes until the market recovers.
For unique houses with historical appeal, or homes in areas unencumbered by a glut of new developments, prices have taken a slightly smaller hit, Mr. Clover said — more like 15 to 25 percent since the peak of the market.
Two-bedroom apartments on the Costa del Sol average 250,000 to 850,000 euros (about $340,000 to $1.1 million), Mr. Clover said. Houses at the lower end of the market, below 700,000 euros ($950,000), have fallen the farthest.
WHO BUYS IN SPAIN
Buyers from Britain continue to make up a large portion of Spain’s vacation-home market, Mr. Mangeant said; next come buyers from the Netherlands, Sweden and Norway. Mr. Clover said he had seen an increase in buyers from Eastern Europe and the Middle East in recent years.
BUYING BASICS
Buyers of older homes in Spain pay a 7 percent transfer tax, Mr. Clover said. For new homes, there is no transfer tax, but buyers pay a 7 percent value-added tax and a 1 percent stamp duty. Notary fees and registration fees are usually 2,000 to 3,000 euros ($2,711 to $4,066), according to Mr. Clover. Legal fees are usually 0.75 to 1 percent of the purchase price.
The seller pays the 5 percent real estate agent commission, as well as a municipal tax based on any increase in the assessed value of the land, not including the value of the house. That tax varies widely, Mr. Clover said, but is usually under 1,000 euros ($1,360) for a house on a small plot that has sold within the past five years.
Whats the average property price for 2 bedroom apartment in a nice area in Paris? Does it bring a satisfying income if rented out to tourists??
Not too many blogs on french property!
Wondering if we could get some good constructive blogs flowing re property purchasing in france?
We are looking seriously at a viager libre in france and are wondering if many have had experiences with this form of purchasing real estate.
We are also seeking to engage an englisk speaking notaire if someone can make a recomendation.