23rd September 2022
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French Property Market Analysis - September 2022Is the French real estate starting to turn and level off? Not just yet according to the Notaires-Insee index published early septembre, at best the beginning of a soft landing.
THE INSEE REFERENCE INDEX IS OUT
Thierry Delesalle, president of the 'commission statistiques des Notaires' of the greater Paris area says, "sales figures are still excellent. The recent exceptional quarters of record sales should be followed by "more normal" ones with a dynamic market going forward."
Admittedly, the rise in prices of old real estate slowed in the second quarter of 2022 with an increase of 6.8% year on year, against +7.3% in the first quarter and +7.1% in the last quarter of 2021, according to the Notaires-INSEE index.
Sales volumes follow the same trend with 1,157,000 transactions over 12 months, remaining at a very high level but starting to slow down after record sales in 2021. This increase has been driven by the desire for green spaces and privacy since the first lockdowns. They have increased significantly faster than apartment prices and more quickly in province than in the Paris area.
Outside of Paris, year on year property prices remain very dynamic. Since the start of 2021, house prices in province (+9.0% over one year in the second quarter) have increased more sharply than those of apartments (+7.6%), whereas it was the opposite trend in both 2019 and 2020.
In the second quarter of 2022, the annual volume of transactions decreased slightly. In June the number of transactions completed over the last twelve months is estimated at 1,157,000, down from 1,176,000 at the end of March. If we compare the volume of transactions with the housing stock, which typically increases by around 1% per year, the volume of sales since 2019 exceeds the record levels last seen in the early 2000's.
BORROWING IN FRANCE IS HARDER THAN EVER
In turbulent times, investors typically take refuge in rare metals (gold is up around 15% for the year so far) and real estate. However as always, markets are driven by supply and demand and currently stock levels of resale properties are low, we expect prices to continue to rise, but at a slower pace due to the economic outlook and the lack of lending appetite from French banks.
In the space of a few months mortgage interest rates have almost doubled in France, it's been ten years since lending rates have risen this sharply. Since the start of 2022, there are even stricter limits when looking for French mortgages with buyers allowed to borrow with repayments lesser 35% of their total income. This is usually calculated before tax and taking into account other mortgages / loans / credit cards.
In addition, lending terms have been tightened and are set to a maximum of 25 years. Do you want to find out if you qualify for a mortgage? Fill out the enquiry form and our financial experts will get back to you promptly to discuss your options. Or learn why should consider using a currency specialist to secure the best rate of exchange and save hundreds of pounds / euros in the process, you would have read about the effects of a strong USD, which is great news for US buyers.
EVERYONE IS TALKING ABOUT CURRENCY!
Our experts at Foremost say that whilst yesterday’s interest rate hike by the Bank of England was necessary to try and tackle the UK’s continued inflation issue, the 0.5% increase was not quite the 0.75% rise investors were hoping for, causing a weakening of Sterling.
The Pound sunk further today as the UK announced its biggest tax cut programme since 1972, which has rocked Sterling as the market struggles to make up its mind as to the direction of the UK economy. Luckily for UK nationals looking to buy in Europe, the Euro is also struggling as fears of a recession increase and the war in Russia continues to subdue prices.
Jack Wiles adds "Buying in mainland Europe continues to be popular for Brits and even more so Americans right now, with USD/EUR being at levels not seen for 20 years. In France and Spain there seems to have been a small shift, but the market is still a sellers one. Properties are snapped up fast, so making sure you know what you are doing with your currency is key."