For many buyers, it is the perfect storm in the French property market right now. There are very few houses coming onto the market for sale, everyone seems to be looking for the same type of property and travel restrictions mean that international buyers cannot even get to France to do any viewings.
In addition, prices have been on the increase since 2015 and country properties particularly are selling at asking price and even above in some areas.
Despite the pandemic, at the end of 2020 the French real estate market had proved itself very resilient (Notaires de France latest report), and this trend is expected to be confirmed in 2021, driven initially by interest rates remaining very low and falling steadily since July 2020. Indeed, rates are currently very close to their historic low. And due to the dominance of fixed rate mortgages, France’s housing market is much less prone to sharp upturns and downturns than housing markets in other countries, where variable mortgages are a major source of instability.
In addition, since the start of the pandemic, there has been a noted change in demand for property away from the cities and towns and this is already having an impact on prices which are rising less quickly, for example, in the French capital than in the rest of France, something that has not happened since 2013.
According to the latest analysis of the French property market by the Notaires de France, there has been a shift among the urban population towards greener areas and a continuing and more permanent shift towards a real estate market that is more provincial, closer to nature and with more space, while still remaining connected. Whether this is merely the acceleration of a lifestyle change that was already in motion prior to the health crisis, a fundamental movement in the property market seems to be underway.
Foreigners are notably absent on the national map. The share of non-resident foreign investors is now close to its lowest level in 10 years but, interestingly, in the same vein as French residents, non-resident foreign buyers are also shifting their investment from urban centres to rural areas.
During the long housing boom which lasted from 1997 to 2007, French house prices surged by 150% (112.5% inflation-adjusted). Since then, the housing market has not moved much. It started to weaken in 2008 and while price falls were moderate, so too have been price rises since then. After falling by an annual average of 1.7% in 2012-2015, house prices started to rise again in 2016 as shown below.
| HOUSE PRICES IN FRANCE, ANNUAL CHANGE (%) | ||
| Year | Nominal | Inflation-adjusted |
| 2008 | -3.75 | -5.41 |
| 2009 | -4.09 | -4.44 |
| 2010 | 7.60 | 5.86 |
| 2011 | 3.68 | 1.20 |
| 2012 | -1.96 | -3.44 |
| 2013 | -1.81 | -2.44 |
| 2014 | -2.52 | -2.79 |
| 2015 | -0.50 | -0.59 |
| 2016 | 1.50 | 0.99 |
| 2017 | 3.25 | 2.08 |
| 2018 | 3.34 | 1.41 |
| 2019 | 3.78 | 2.67 |
| Sources: National Institute for Statistical and Economic Studies(INSEE), Global Property Guide | ||
Bear in mind, that the French property market is full of micro-markets so it is always very difficult to generalise and also, most importantly, French country property, despite having increased in price, is still better value than most other countries for similar quality houses. If you need help with your property search, please get in touch: nadia@foothillsoffrance.com
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