Testing the French Property Market for Fluidity


From a survey that examines the health of the French property market using different indicators for an overall picture of its health, Nantes and Strasbourg (pictured above) come out on top

Just how does one know whether or not a market is sound? Whether or not you should invest? Prices tell you only so much and the French property website MeilleursAgents has tried to define what a healthy market actually is by relying on three main indices: reasonable transaction delays, the balance between the ratio of buyers to vendors and the levels of solvency of the buyers in the immediate area.

By these criteria, the 10 largest cities in France don’t come out of if well. In all of the main cities, vendors are more numerous than buyers, but the market gap is larger or smaller in different areas. According to the boffins at MeilleursAgents, a market is not fluid because there is one buyer for each property, but when there are 2 or 3 of them to every vendor. In practice, a buyer will visit several properties before making a decision to buy.

For now, Lyon and Toulouse are the cities that are the most “balanced” in this sense, with only 1.1 active buyers for each vendor, ahead of Nantes, Bordeaux, Paris and Strasbourg, where there is only 1 buyer for each vendor. Down on the Med, it’s worse – particularly in Marseille, where there is only 0.6 buyers for each vendor. As for the rural markets, it’s usually a real buyers’ market, with often only 0.3 buyers looking for your house! By way of comparison, Paris had 6 buyers for every vendor during the boom year (in France, at least) of 2010.

Even though the Irish view might be that Irish sales grind through at a snail’s pace and French property deals tend to conclude quickly, this is not always the case. In a fluid market in France, a “good” timescale is about 60 days to get through the paperwork – quite similar to that of Ireland. Today, only Paris moves fast it seems, with a an average 58-day turnaround. Elsewhere, it frequently strings out to an 80-day affair. Down South, it seems that legal machinery moves at an even slower pace: In Nice, the average is 120 days and in Marseille, it’s 129!

The solvency issue of French property markets is somewhat rosier. The website calculated the proportion of each city’s inhabitant that can afford a home of 60m2. This is worked out on the basis of an average household of 2.2 people and according to the average means established by national statisticians INSEE. The result is that Paris brings up the rear, with only 20% of the French capital’s households hopeful of becoming owners of property. In Marseille, Strasbourg and Nantes, however, the dream of owning one’s own home is a reality for the majority of their inhabitants. In the final shakedown, throwing all of the above criteria into the mix, it is only these two latter towns that present a clean bill of health according to the property doctors at MeilleursAgents.

As for the future, it doesn’t look particularly bright just yet:

“For 2015, there are still not enough buyers on the horizon,” says MeilleursAgents boss Sébastien de Lafond. “Overall, there looks like being a downward trend in our cities’ property scene, without there being any sudden drop.” According to de Lafond, the total of 705,000 transactions registered in 2014 – representing a drop of 12% from the heights of the beginning of the 2000s – is a very bad result. With the current demographic growth patterns, there will need to be 900,000 sales in order to constitute a rise in demand.

The only factor that could counteract or soften the phenomenon of falling prices is for interest rates to fall even further. Last year, the fall in values predicted by MeilleursAgents was less pronounced in reality because, they say, of the “unexpected fall in interest rates”. For 2015, they are predicting growth of between 0% and 3% for the towns that are the most fluid and a drop in property prices of between 3% and 5% elsewhere in the country.

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