Despite an overall picture of general stagnation, there are green shoots in the French property market – that seem focused on the paths less trodden
One of the characteristics felt all over Europe in a slowly improving economic picture is that of growth that seems to be arriving in fits and starts and in various locations. This is true for the French property market also, as backed up by the latest statistics and pronouncements from market analysts.
Between June 2014 and June 2015, 707,000 second-hand homes were sold, according to FNAIM (France’s main auctioneers’ association) figures. This represents a 2.3% rise over the last 12 months, but it is still some way off the temporary bounce back that occured between 2010 and 2011 (776,000 and 799,000 respectively) and well back from the busier pre-crisis years before 2008 (more than 800,000 sales in 2006 and in 2007).
Mortgage approvals statistics show a similar pattern and France’s main mortgage specialist is now predicting sales of 750,000 second-hand homes in 2015 – a significant increase on the 691,000 from 2014.
It’s a timid enough affair in terms of any kind of resurgence but it means that at the very least, the rot appears to have stopped in terms of falling property prices in general and they appear to have stabilised in the first trimestre.
Not everyone is convinced that things will stay that way and some industry commentators in France are even predicting that there will be a further erosion of property prices over the course of the entire year of 2015.
Executive director of nationwide auctioneers Laforêt Yann Jehanno is predicting a drop of around 2%, while FNAIM itself is predicing it to be 2.2% (-1.5% for apartments and -2.5% for houses) while France’s national mortgage lender Crédit Foncier is slightly more pessimistic again at 2.5%.
“The property market has probably hit the bottom and could bounce back strongly,” says the FNAIM, “provided that its main engine – lower mortgage rates – doesn’t fail it.”
The historically low interest rates appear to be supporting the market and are limiting the fall in property prices by giving a certain amount of wriggle-room to potential purchasers. But interest rates have begun to creep up, following in the wake of the 10-year French government bond rate (1.18% on the 10th of July). According to Crédit Foncier provisions, they will reach 2.4% on average by the end of the year, as against 1.99% in June. According to official calculations by number crunchers CAFPI, someone with a monthly income of €1,000 looking to take out a 20-year mortgage could borrow €199,162. However, if the interest rate climbs by 0.25%, he’ll only be able to get his hands on €194,562 of finance and an 0.5% rise would reduce his purchasing power to €190,108. The point is that while credit will remain low in France, “interest rates will have less of an impact on prices,” warns Bruno Deletré – head of the Crédit Foncier.
Behind all this, there is a picture of strong regional differences. Some regions – especially Normandy, the Centre and Lorraine, as well as the rural zones, have seen significant property price falls. In Metz, for example (in main picture), prices have fallen by 12.4% between the 30th of March 2014 and the 30th of March 2015, according to statistics from the Notaires de France (French notaries). Other cities where there were drops of note include 11.4% in Nancy, 8.9% in Saint-Étienne, 7.6% in Tours and 9.8% in Caen.
In contrast, other places seem to have a thriving property market. In Strasbourg (not a million miles from Metz), second-hand property prices rose by 3.1% in the same period and in Rennes, they’re up 2.8%. Bordeaux (+1.8%) was the only major French city to register a rise in property and the ancient Roman city of Nimes (+1.7%) was also up.
The new homes market is also showing timid signs of revival: “The number of apartments and houses being booked is picking up slowly, without really taking off,” notes the FNAIM. The Crédit Foncier, meanwhile, is predicting that 2015 will see almost 375,000 new homes built – an increase of 5.3% from the 356,000 built in 2014.