The Outlook For The Real-Estate Market In France
Article: Possible opportunities for investment in real-estate in France.
Due to slow growth, a high rate of unemployment and austerity measures, the economic sentiment in France continues to be weak as consumers are forced to cut spending.
The combination of tax increases and spending cuts for 2012 and 2013 totaling USD $25 billion has failed to protect the country’s AAA credit rating.
- This means that the outlook for the commercial real-estate is bearish barring a few areas such as high-end retail.
- The French construction sector contracted between 2008 and 2011 though there are signs of a rebound in 2012.
- During the first half of 2012, growth was a healthy 5.7% year on year, which was significantly better than anticipated earlier.
- The debt crisis in the Euro zone means that we can expect growth to stagnate.
Policymaking seems to have done little to spur growth and stimulate the economy – GDP growth is expected to be 0.1% for 2012 and 0.5% for 2013.
Source: Mayo Wynne Baxter, Solicitors
The housing market in France
The real estate market continues to be nervous, according to local developers.
- The housing market was down for about a year after the global economic crisis but has been growing ever since.
- Now prices are down about 10% from the previous year and buyers are waiting for prices to drop further.
Another broker says that the past year has been the worst since 2008. Sellers are unwilling to reduce prices, however, and this has exacerbated problems:
- High rates of unemployment
- Low levels of productivity
- Nervous lenders
Who is buying in France
The British are the dominant buyers in Normandy while other buyers belong to Belgium or Holland. Many homes in this area, like other regions outside Paris, have been traditionally regarded as second homes but, with the proliferation of the Internet (which makes it possible to work from anywhere), these are increasingly being bought as primary homes.
- There are international buyers from all over the world but the majority belong to the European Union.
- There has recently been an increase in the number of Italians caused, no doubt, by political uncertainty at home.
- There are no restrictions on foreigners buying property in France and transactions are generally handled by notaries.
- Buyers are well protected because research into title is regulated and meticulously executed (the notary usually determines that the property is legally owned by the seller and free of encumbrances).
- It is also possible for employed foreigners with good credit standing to the obtain mortgages from French banks
The outlook for 2013
The French Notaires Association’s report on Paris real estate for the third quarter of 2012 indicates certain trends for 2013. Some of them suggest that you should proceed carefully while others indicate a favorable environment for foreign buyers.
- Prices can be expected to remain stable with only a modest increase over 2012, if at all.
- The increase is expected to be in the region of 1% compared to the 15% to 18% range seen in the past.
- The inventory of apartments for sale is likely to increase.
The bottom line
Buyers may find that they have an advantage because of the following factors pushing prices downwards:
- Some buyers from Europe and North America are staying away because of the Euro-zone crisis and taxation concerns.
- The inventory of apartments may increase as sellers put more properties on the market to reduce taxation or to avoid capital gains.