Make no mistake, France as a whole has seen the growth in
its housing market slow since 2004 when it saw an
impressive 15.4% growth in prices compared to just 4.7% in
2007 (source FNAIM). However like most property markets it
is all about the location and micro-location so that even
in slower times you can make sure that your property
continues to increase in price. Take old favourites such as
Cannes and Nice which each saw property price increases of
8.2% and 9.1% respectively this year which are healthy
indeed and the South East as a whole grew by 6.5%. North
and East of France also did well with property price growth
averaging 6.4% this year. On the other hand the South West
which had been doing well up until now and was seen as more
"up and coming" rather than established has dropped quite
dramatically to just 0.2% this year. One of the best
performers so far though this year has been Limoges in
Limousin achieving 11.3%.
If you invested in France just recently and expected to
make a quick buck overnight and get out then depending on
where you invested this news won't exactly be music to your
ears. If however you were advised (as you should have been)
to view it as at least a 5-10 year investment then you
won't go far wrong. What we are seeing in a number of areas
with slow house price growth is in fact healthy growth in
the rental market instead. Paris for instance which
experienced house price growth of 4.7% actually saw rental
income increase by 4.6% bringing average yields across the
city to 4.5%. This often happens in a slow property market
as demand for rental property increases and gives a chance
for rentals to catch up with house price growth. Therefore
if you are a landlord who bought diligently you will
actually be reaping the rewards now of steadily increasing
yields and a property in high rental demand.
For those looking to invest now it is an excellent time to
buy as it is such a good buyer's market. Euro interest
rates although the highest they have been since 2004 at 4%
are widely expected to decrease in the near future and are
still not so high as to make mortgage payments difficult.
Mortgage products are also becoming increasingly flexible
and competitive and many banks are in fact now offering 30
year mortgages and up to 100% finance which should help
investors. We are also witnessing offers of 10 to 15% below
asking price being accepted which historically is virtually
unheard of in France. If you couple this with the agency
margins being squeezed the result is some rather juicy
deals out there waiting for the savvy investor.
----------------------------------------------------
Niclas Dowlatshahi is Managaing Director of Leapfrog
Properties- an agency that specialises in helping
foreigners buy property in France.
http://www.leapfrog-properties.com
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