French property prices fall slightly; mortgage rates low

French property prices fall slightly; mortgage rates low

According to the FNAIM - or French Real Estate Federation - there has been a 3.6 per cent fall in prices in France in the first half of 2013 compared to the end of June 2012.

But as ever, these averages mask contrasting trends. Prices are down -3.8 per cent in the provinces, yet up 2.7 per cent in the Ile-de-France). Prices are much lower in rural areas.

Plus cities vary widely, according to the FNAIM: +4.6% for apartments in Bordeaux, but - 3.9% in Lyon and -3.7% in Marseille or Montpellier.

"Less bad than expected" is the sentiment the feeling shared by many estate agents, according to Jean-François Buet, President of the FNAIM and Matthieu Cany, managing director at Sextant French Properties, experts in French leaseback properties and French mortgages.

"The Apocalypse announced by some hasn't occurred yet and there are many signs indicating that it will not happen," says Mr Cany.

"But on the upside, buyers can borrow under conditions never seen before as lending rates remain low. The erosion of purchase prices and the drop in credit rates have revived the purchasing power of property buyers in France. It is now possible to borrow at 2.95 per cent over 20 years and 2.60 per cent over 15 years."

People are more optimistic it seems. Today, 58 per cent of people believe it is possible to do "good real estate business" investing in an apartment according to the last month FNAIM/IFP's poll. In a similar survey conducted in October 2012, only 42 per cent of people had the same opinion.

Buyers know that prices are decreasing, and that they can borrow under conditions never seen before. They know that the ball is in their court.

French estate agents hope that this positivity in the market will result in transactions, but we still have to wait and see how the market performs in the second half of the year.

The depressed economic situation, higher taxes, and higher unemployment continues to impede the buyers from dashing.

"Buying a property is a long-term investment and it is primarily a matter of trust. For now, the Fnaim expects 635,000 property transactions in 2013, that is to say 72,000 less than last year," adds Mr Cany.

Second homes in France: an exceptional reduction of 25 per cent on the CGT

Some good news. A new reform has been announced by the French President, François Hollande, in June 2013. The minimum holding period for a second home, after which taxes are exempted when you want to sell it, is going to be reduced from 30 years to 22 years.

The French Minister of the Budget, Bernard Cazeneuve, has decided to apply an exceptional reduction of 25 per cent on the CGT for the sales which will be finalised between 1st September 2013 and the 31st August 2014.

This decision is part of the reform of the taxation of capital gain taxes on second homes in France.

Are you planning to buy or sell a property in France?

Sextant French Property is a network of 160 estate agents located in France with local knowledge. They work with 50 developers and have gained over the past 8 years an expertise in French leasebacks and French mortgages. They are now listing various properties on this site, including a two-bed townhouse in the Dordogne for €65,400 and a beautiful four-bed stone house with land in Lower Normandy (pictured) for €320,000.

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