French Property Market Analysis - September 2022

Is the French real estate starting to turn and level off? Not just yet, according to the Notaires-Insee index published early September, at best, the beginning of a soft landing.

The Insee Reference Index is Out for Analysis

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.

The French Property Market is Still Strong

Sales volumes follow the same trend, with 1,157,000 transactions over 12 months, remaining at a very high level but slowing 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 the provinces than in the Paris area.

Outside of Paris, year on year, property prices remain very dynamic. Since the start of 2021, house prices in the province (+9.0% over one year in the second quarter) have increased more sharply than those of apartments (+7.6%), whereas the opposite trend was observed in both 2019 and 2020.

In the second quarter of 2022, the annual transaction volume 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 2000s.

French Mortgages are (Much) Harder to Access

In turbulent times, investors typically take refuge in rare metals 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 10 years since lending rates rose this sharply. Since the start of 2022, there have been even stricter limits on French mortgages, with buyers allowed to borrow with repayments of less than 35% of their total income. This is usually calculated before tax, taking into account other mortgages/loans/and credit cards.

In addition, lending terms have been tightened, with a maximum term 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 you 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 American buyers.

Everyone is Talking About Currency

Our currency experts say that whilst yesterday’s interest rate hike by the Bank of England was necessary to tackle the UK’s continued inflation issue, the 0.5% increase was not quite the 0.75% rise investors had hoped for, causing Sterling to weaken.

The Pound sank further today as the UK announced its biggest tax cut programme since 1972, which has rocked Sterling as the market struggles to decide on 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 drive prices up.

Jack at Currencies Direct adds, “Buying in mainland Europe continues to be popular for Brits and even more so Americans, with USD/EUR being at levels not seen for 20 years. In France and Spain, there has been a slight shift, but the market remains a seller’s market. Properties are snapped up fast, so making sure you know what you are doing with your currency is key.”


Source Notaires-Insee