French Property Prices Could Rise Again in 2015


Property watchdogs in France are predicting a reduction in property values this year of the order of 4%, followed by a stabilisation from next year

Despite a weakened economy and a significant unemployment rate (10.4% in April), the French property market “is still proving itself to be resilient”, according to American-based self-appointed economic bean-counters-for-the-world Standard & Poor’s in its latest study of the French property market. Prices for second-hand property are due to continue their contraction this year to the tune of 4%. Then, say S&P, prices should “increase by 1% in 2015 and by 2% in 2016.”

This resilience is down to two factors mainly: the first is a “chronic gap between the levels of offer of and demand for homes” – the number of new builds has plateaued at 330,000 units last year, their lowest since 2000. The second mitigating factor is the attractiveness of interest rates and credit conditions, which are at historically low levels (a juicy 2.85% in June).

In any case, credit availability is still tight and only the most solvent households can manage to get their hands on this low-interest cash, effectively shutting out many would-be buyers from an otherwise potentially bullish market. At the moment, it is estimated that there is 1.1 potential buyers for each vendor – a slightly higher than the 1:1 of last year.

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