France prices falling? (low activity in market)

[birdy]

Hi guys.
After the falls in property prices in US I was told by a friend that has few apartments in France (Nice) That the market was so slow and that prices
were coming down!
Is this true? and do you expect this to go further?

 

[DC]

Sarkozy can only help the situation.

 

[Lynda Saxton]

Hi,
The market is slow in France, even at 25% reduction a fully renovated property in a busy tourist area is hard to sell, people have got so sceptical of scams, they are suspicious of everything "if it seems too good to be true it usually is", however occasionally it is true, it depends on whose selling and the real need to sell ie: divorce, actually it is an ideal time to buy as prices will only go up ecpecially with Sarkozy's plans.
If you want a great bargain, a genuine reason for sale, a truely lovely property contact [email protected]

 

[wildperson]

Hi Linda Try selling it through huntersearchclub they seem to have active buyers,my friend has just sold to a cash buyer at a fair price .Good luck.

 

[Attika International]

According to the Nouvel Observateur, there are certain areas of France where prices are still rising rapidly - namely Paris and the Cote d'Azur. OUr agency has offices in Nice and Cannes and have seen the number of sales this year increase this year by overseas buyers. Prices have certainly not stabilised either - according to the Chambre des Notaires they rose in Nice by over 12% in the first months of 2007 - we are still waiting to hear the full results for the year but it's expected to be at over 17% growth.
With the number of foreign buyers wishing to relocate to the Riviera and the number of low cost airlines serving the area, we can only see that the market on the Riviera will remain strong.
Claire Healy
ATTIKA INTERNATIONAL

 

[propertyborders]

Hi guys.
After the falls in property prices in US I was told by a friend that has few apartments in France (Nice) That the market was so slow and that prices
were coming down!
Is this true? and do you expect this to go further?

This is the first I have heard of this.

 

[neustria]

In our area of the Poitou-Charentes (south Deux-Sevres) there are hundreds of properties on the market with no buyer in sight. There are certainly amongst these some good properties to be found at well under peak 2006 valuations. If you want to buy, you can take your time, in this area at least I can't see anything picking up anytime soon.

Beware of the agents who systematically paint a rosy view of the situation in order to entice you to buy. Never forget where the vested interest of the person giving you his advice lies!

As regards France it shouldn't be forgotten - it often it is here - that Real Estate had a fantastic run up from 2000-2005. Such periods, when they come, are usually very spaced out over time. I believe that the inflation provoked by the country's adhesion to the Euro played a major part in this rise, which also happened to coincide with the bursting of the DotCom bubble. To my knowledge only Germany remained unaffected, but that country had its own specific set of issues.

France has traditionally a segmented market with places like Paris and the Riviera behaving one way, remoter areas quite another. You will have to look at the specific conditions in the market you are looking at. In desirable urban high-density areas prices seem to hold up better in soft market conditions as we are seeing now.

I hope that this is useful to some of you.

 

[CaroleBay]

Hi Neustria

Very interesting - you're the second person I've come across in a few days to say the same about Poitou-Charentes.

I wonder what is happening in other regions.

Please, does anyone else have any comments ?

Carole Bayliss
mortgagefrance.com

 

[neustria]

Thank you for your comments Carole.

We relocated to S. Germany last summer where we are currently considering investing in Commercial Real Estate to supplement our income. (see my other post on the subject)

We had originally considered selling our holdings in the Deux-Sevres but there were so many properties on the market that it seemed to be the very worst possible time to sell. Since we had originally purchased in 1993 the property value (at the top of the market)had actually gone up nearly fourfold by the summer of 2007.

We found renters therefore, and the income from the property now just covers our monthly payments on the 15-year mortgage. Soon the mortgage will be paid off and we will be able to enjoy the income from it until the market becomes more buoyant.

To finance our future German investment we sold an appartment in Provence where the market has held up better. I hope to invest this cash in Germany where the yields are higher.

We determined the price of the appartment we sold in Aix by assuming that it was producing a yield of 3.8%. Yields there dropped as the values appreciated, the rate of rent increases lagging that of real estate appreciation...

All my best.

Neustria

 

[CaroleBay]

Hi There

I've just come across this website Immoprix - Bienvenue which gives figures and percentage increases of property prices throughout the various regions and many departments in France.

It's a shame the last quarters figures for 2007 are not available yet, but it does show that 2005 was a peak year for many departments.

Carole Bayliss
mortgagefrance.com

 

[neustria]

Hello Carole,

I just looked at the Immoprix - Bienvenue site, which is certainly interesting. But is it accurate?

I just spoke with the people who are negotiating an appartment sale for me in Aix-en-Provence, and I was told that prices there now are now dropping sharply.

Immoprix - Bienvenue however shows a price rise of 17.5% in this area from 2006-2007.

If their figures are correct (which is possible I suppose),then the reversal from 2007-2008 in the area has been very brutal indeed.

Neustria

 

[CaroleBay]

Hi Neustria

Well, immoprix is a site with information compiled by notaires from property transactions, so one would hope it's correct.

We're coming across many differing view points from some of the expat websites, and there are a lot of people selling up in France and going back to where they came from.

There's a lot of talk about property prices dropping in some areas.
Interesting though, we're arranging a lot of equity release mortgages, and so far we have not had a property downvalued by a bank.

Strange times indeed ....

Carole
mortgagefrance.com

 

[melanie123456]

No reports of this in the UK property press

 

[neustria]

Hello Melanie,

Not everyone is aware at how biased the financial press can be. When it comes to property for example, price drops are accompanied by headlines which encourage you to buy at what are now "bargain prices". (It was on the market last year at 500.000, now you can pick it up for only 410.000!!!) Your local estate agent couldn't have put it better... And when the prices are rising you should also buy because if you don't you will 'miss the boat'! Either way, NOW is the time to buy. People of course buy these papers when they are thinking of investing so should the papers start telling us to hold off, then we will not only put our investment projects on hold, but we will also stop buying that specialty press.
Exactly the same phenomenon shows up in the press specialized in the equity markets. I have yet to see a headline which advises people to hold on to their cash, and wait until the storm passes. Instead they headline, "Here is our exclusive list of stocks which will do well in the economic downturn." What they forget to mention is that when the market as a whole drops, very few individual stocks will be able to resist. At best they might drop a bit less than the market, which the press will then describe as "outperformance" or "did better than the market average last year".
In a downturn, may the buyer beware... And he should also know when to distance himself from what he reads.

 

[ady1231]

Hello Carole,

I just looked at the Immoprix - Bienvenue site, which is certainly interesting. But is it accurate?

I just spoke with the people who are negotiating an appartment sale for me in Aix-en-Provence, and I was told that prices there now are now dropping sharply.

Immoprix - Bienvenue however shows a price rise of 17.5% in this area from 2006-2007.

If their figures are correct (which is possible I suppose),then the reversal from 2007-2008 in the area has been very brutal indeed.

Neustria

hi neustria;

Well i am currently looking to buy a studio in center of nice. From what i can see prices are holding up at about 3500-4500 E/sqm!

I have been told that provence and paris are always an exception, so i am really confused, is it a good time to buy or not?

 

[misch.chief]

it is slow, mainly in Nice, mainly because western economies throughout the world are worsening, meaning traditional investors are tentative about investing there

 

[neustria]

Personally, I would wait before investing because many knowledgeable people are expecting the global economic situation to get worse - much worse. Don't forget that real estate borrowing is at the heart of the current crisis.
As for choosing a time to jump in, I would keep in contact with the evolution of prices in the area that you are interested in. Visit places from time to time to see what is on offer, and you can follow the evolution of the prices per m2. I am guessing that volumes in Nice real estate are probably down, because sellers are so far unwilling to drop their prices, and buyers are unwilling to buy near the top of the market. Volumes should pick up as prices begin to fall.
Then, look at interest rates. An economic downturn will necessarily be accompanied by dropping interest rates. When interest rates start bottoming out, then real estate prices will certainly begin to rise. This will be the time to jump in but, this time could well be a couple of years off I'm afraid... You will certainly need to be patient.

 

[neustria]

Re. "As regards whether or not it's a good time to buy, apparently it is.

The euro has doubled in value against the dollar since its launch in 2000.

Sterling is at an all time low. As long as the Bank of England is focussed on interest rates and not on inflation then analysts say that sterling's continued decline is assured.

France is aiming to bring inflation back to below 2% in the next year according to Christian Noyer of Banque de France."
****************************************************************
A good time to buy?????
Prices are dropping, but show no sign yet of bottoming out....
Sterling is weak... so you want to purchase in to falling market with a devalued currency? I don't get it.
France's inflation is running amok, as it is everywhere because of rising food and fuel prices. The official figures published by the government don't even begin to tell it like it is on the inflation front. The situation is serious and shows no sign of easing.
The new gouvernment under Nicholas Sarkozy is now weak and unpopular. His promises of change are no longer believed, and the country is depressed. Why should house prices rise when the newly elected gouvernment is disappointing the country, and where a global economic downturn will lead us God knows where? ?
Real estate in France has had a nice run from 2000-2005, so prices related to income are already very high, despite the few percentage points downturn. For the non-euro investor this rise is even more marked as that currency has gone through the roof.
I don't see this as being a healthy environment to invest, although the real estate agents will always be crowing at you to take advantage of the 'fire sale' prices...

 

[Davep]

It would appear that from conversations I have had in the Carcassonne area that the lease back deal is not so rosy at the moment. There appears to be a difficulty with rental returns and the sheer number of developments. We purchased our house south of Carcassonne in a small town, but outright and not leaseback. We have never looked back. We looked at a small development of 14 houses in 2007 that was to finish end of 2008. Just last weekend we passed the sites and although all the road and services are now in place, nothing has started. My advice to prospective buyers, is to check out local builders and inspect what they are building now. Thats what we did and it paid off, we could see how close the building was to completion and were assured it was what we wanted and at the price we could afford.
Dave

 

[Davep]

I just read your very interesting post on french prices falling. You make the correct assumption that its a lifestyle choice not an investment choice. I would be very concerned for the large number of leaseback properties on the market and the perception that they will give good returns. Having attended several "shows" in Dublin I decided a couple of years ago that they were not for me. I went the route of buying a new build in the final stage of completion and as such had only 5 months to wait until I collected the keys. With reduced Notair fees and a two year stay on our local taxes, I was very pleased we chose a new build. We had considered an off plan new build in a town close to us now but I recently visited this development of 14 houses and while the services are in and it appears that 5-6 plots are sold, nothing has started. We will have our second summer in our house this year. How different would our experience be if we had opted for this development. Every time I return to France I check the immobillier's windows and am surprised at seeing the same properties still for sale. I was offered , recently , what I thought was a very good investment. It is a 2 bed apartment on the first floor with a third floor for development into the same, the location is a period house on the main square in Limoux. It really is a beautiful location but further investigation, showed that it has been on the market a long while and asking price was €150k.At €75 per apartment I thought that it would make a great rental investment but it appears that the market is not so sure yet. A location like this in Dublin would need a zero added on. I will continue to watch the space and see what happens.
I do think that the Sterling / Euro problem might mean that you could see an increase in Irish interest in France at the expense of UK buyers. Perhaps sellers should target that market now.
Dave