The cost of buying French property falls 25%


The property market in south west France is suddenly booming thanks to the perfect combination of favourable currency exchange rates, low house prices and very cheap mortgage rates. In particular, the strengthening of sterling against the euro means that French property is attracting huge interest from British buyers at all levels of the market and investors are also moving in.

It is currently almost 25 per cent cheaper to buy a property in France than it was a year ago. The reasons are threefold:

Firstly, according to the FNAIM (the national association of French estate agents), average house prices have fallen by 1-2% annually over the past few years.

Secondly, the pound has soared against the euro over the past twelve months. Figures from Currencies Direct show that the pound rose to €1.40 last week, up from €1.22 this time last year. This effectively means that a €250,000 property is around €24,000 cheaper than it was a year ago.

Thirdly, mortgage rates are cheaper than they have ever been; it is now possible to get a 20-year fix for 2.55% with even lower rates available for the very best borrowers. This is a sharp fall from 3.5% a year ago and means that someone buying today would save more than £45,000 in interest payments over the 20-year term of a €400,000 (£290,000) mortgage if they fixed at 2.55% compared with 3.5%.

All of which seem to have combined to produce the current burst of activity in the French property market; British buyers who have been waiting a long time to invest in France are clearly now taking the plunge.

This sudden buying boom and action by Europe’s central bank, which has embarked on a programme of “QE”, will push house prices up over the medium term, making now a good time to invest in property. House prices in France are predicted to rise by 15-20% over the next decade.

Please get in touch if you would like to be put in touch with a recommended mortgage advisor or currency advisor and be careful to check out the credentials of anyone you plan to trust with your money.

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