France well placed to weather property market slump

Description:

A recent report by Xerfi (one of the leading market study groups in France) suggests that whilst there are bumpy times ahead for French house prices in the medium term, France has cause for optimism.

In the last year property prices have started to waver, with existing properties down by 3%, new builds down by 4% and apartments down by 5%, but Xerfi maintain that what we are seeing is a correction of the over-inflated market, after 10 years of exceptional growth.  In the period 1997 to 2007 house prices in France increased by 146%, a significant increase, but less than many other European countries.

They predict that France is at the start of a correction process that will last through until 2011, when the start of a recovery is expected to galvanise the market through to 2015.  French homeowners typically carry less debt, and the rate of ownership is lower than in other European countries.  This coupled with a higher birth rate than its neighbouring countries means that demand for property will grow faster.

The report is likely to encourage investors, at a time when many potential British buyers' are having difficulty in releasing equity from their UK property.  Charente based estate agents  VEF suggest that rather than buyers staying away, they are being more realistic about the types of property they can afford, with the average price of property sold by them dropping to 160,000€ (it was 220,000€ in 2007).

Nikki Barnett of Europe-Immo-Jonzac in Charente Maritime notes a definite shift in client profile, "we see more serious buyers now, many of whom have already sold their UK property and are not restrained by the waning UK market", she continued "the market has shifted from 2 years ago when buyers were keeping their UK property and looking for a holiday home, to a position where young families and retired people are looking to move permanently."  She admitted that 2008 has been a tough year, and that a recent resurgence of activity at her agency in Jonzac could be partly down to diminishing competition within the industry, rather than an upturn in the market.