Good summer buying conditions in France

French property + pool

News from across the Channel is that we are experiencing good market conditions for buying French property. For the next few months at least, the outlook for rates is stable, with a chance of slightly lower fixed rates in August and September. Whilst some commentators have suggested we are seeing a bubble beginning to form concerning French property prices, due to the extended period of low rates, we are nowhere near the levels of price rises seen between 2002-2005 with Jean-Philippe Cotis, of the French National Institute for Statistics, not seeing any “imbalances”. The relatively small increases in both house prices and interest rates already seem to have put the brakes on the numbers of transactions in the French property market, which remain at 2007 levels with more sellers than buyers.

The Federation of French Estate Agents predicts the increase for this year to maintain the same levels seen in2010 at an average 3%-6% across France. This is largely based on interest rates which are still extremely attractive (examples below). Compared with average prices for the 2nd quarter last year, house prices are up 5% and apartments up 8.6% making an overall increase of 6.8%. Comparing July 2010 to June 2011 we find the overall increase to be +3.8% versus +1.5% in 2010 and -4.90% in 2009. These increases have brought average French house prices back in line with levels last seen in 2007 when interest rates were 1% higher on average.

Better news is also to be had on the competition amongst French banks for clients. After an initial retrenchment by the banks – in terms of strengthening of criteria due to the market contexts of an increase in regulation, the number of defaults and the cost of liquidity – there now seems to be a slight overall increase again in the levels of loan to value on offer. In addition, bank committees have also softened their approach further, with more applications succeeding first time around.