Latest Deloitte European residential property index shows that French are amongst those with the lowest buying power
“France is one of the European countries where it is the most difficult to access property.” So says the third study on the European property market from analysts Deloitte. Last year, French households had to fork out 7.9 years of gross pay on average in order to become owners of a new home of 70m2 (essentially the size of a 2-bedroom apartment), although in one year, their buying power slightly improved (9.4 years in 2012).
“This development is explained by a very light retraction in the price of stone (-0.9% in 2013), but certainly not by low lending rates and a change in profile of buyers, who include more and more wealthy clients,” says Deloitte associate Laure Silvestre-Siaz.
France, along with the United Kingdom, is one of the most expensive countries in Europe. In 2013, British households had to sacrifice on average 8.5 years of personal revenue to buy a 70m2 new home – much higher again for those based in the capital London, which is officially the most expensive capital in Europe, ahead of Paris.
Stone price inflation has pushed the French government into taking cooling measures. Despite the drop in price in 2013 (-5%), the Italians also need to spend a considerable proportion of their gross incomes (7 years) to become property owners.
“Inequalities in property purchasing power are deepening in Europe,” says the study, which emphasises the significant gaps between Russia (10 years’ salary) and Denmark (2 years). Contrary to what some people may think, “property prices don’t seem to be properly correlated to the economic performance of a country,” notes the study. In fact, it’s in countries such as Denmark, Germany, Holland and Belgium (all of them rich nations) that property is the most affordable. Paradoxically, it’s in Denmark – where the cost of living is generally the highest in Europe – where high-income Danish households benefit from the strongest buying power. Then comes Germany where last year the purchase of a 70m2 new home cost the equivalent of three years’ gross salary. This was almost a full year more than in 2012 as a result of strong property price growth last year following many years of stagnation.
Property is also affordable to the common man in Portugal and Spain. The drop in house prices in Spain since the puncturing of their property bubble (-13% in 2013) has given some breathing space to households: the purchase of a new 70m2 home represented 3.6 years’ salary for the average Spaniard, as against 5 years in 2012.
In Ireland – where we are no strangers to the notion of the property bubble – the halving of property prices in the last 7 years has meant that we are all closer to the lower rung of the property ladder, needing only 4 years’ salary to buy that brand new 70m2 dwelling.