Looking Ahead: The Market in 2010

It’s official. The future looks rosy once again in the world of French real estate — or at least that’s what’s being bruited about by experts predicting how the market will fare in 2010.

Housing prices had already begun to rise in the early autumn of 2009, as revealed in a report released by the French National Association of Real Estate Agents (FNAIM). The figures, published at the end of the year, indicated that prices had risen by 3.9% in the third quarter of 2009, after a series of price falls in the preceding months.

And while real estate agents are certainly not predicting an immediate return to the glory days when houses across France were flying off their books at a phenomenal rate, they are quietly confident that the downturn of the last 18 months or so has passed.

“It’s a cliché but I do think the future is rosy, here in this corner of France at least,” says Mark Sayers, who runs Med and Mountain Properties in the Pyrénées-Orientales, in the southeast corner of France. “I don’t think prices will fall any farther, but I don’t think they will rise much either. They will probably remain quite stable for the time being.”

“So this will be a good time to buy in France,” he adds. “Buyers will be able to pick up bargains, and then over time see them rising in value.”

His optimism seems to be mirrored the length and breadth of the country. According to Yolanda McCafferty, a real estate agent in Paris, “During the second part of 2009, we experienced a moderate recovery in all aspects of the business — an increase in the number of prospective buyers looking, an increase in the number of transactions completed, price stabilization and an increase in values. I expect that the trend will continue in 2010, as pricing continues to rise and the number of buyers increases, eventually stimulating the number of transactions.”

McCafferty, who is a negotiator with Vivre à Paris, adds, “Our biggest challenge of late is inventory. Although there are a number of buyers looking in the market, there is a scarcity of available apartments. It looks like that will continue through the first quarter of 2010. In Paris, sellers typically decide to put their homes on the market in the spring. Our hope is that with prices starting to go up, we will also see a rise in the number of properties available on the market, and continue on the road to recovery and market confidence.”

Kirkor Ajderhanyan, director of Agence 107 Promenade in Nice, is even more buoyant. “We didn’t have many problems selling properties last year, and I think there will be even fewer problems this year,” he says. “We sell apartments on the Promenade des Anglais, and you can find almost anything here for every kind of budget, from a small studio flat of less than 40 square meters near the airport for around €175,000 to a one-bedroom apartment near the Hôtel Negresco for €688,000.

“The financial crisis did not spare the property market of the Promenade,” says Ajderhanyan, “but it brought prices down to more realistic levels. And it’s still fair to say that the demand for places on the Promenade des Anglais is still much higher than the supply.”

Such optimism might be passed off as sales propaganda, but the most recent figures for the French housing market do back up the positive attitude of many agencies. Not only did prices go up 3.9% in the third quarter of 2009, but when adjusted for inflation, the price increase was 2.9% for that period — the highest inflation-adjusted increase since 2004.

The hikes mean that the average price of an apartment in France is now €2,972 per square meter, up by 4%, while the average price of detached houses rose by 3.6%.

The upturn in the housing market can largely be attributed to the structure of the mortgage market. More than 80% of all privately owned properties in France are mortgaged, and 80% of those mortgages are fixed-rate. With interest rates back to their pre-crisis levels, modest house price increases are now expected.

Another positive sign is that, while mortgage markets in many countries are at a standstill, France’s continues to chug along — new housing loans worth €86.8 billion were made during the first half of year 2009, down from €132.6 billion during the same period in 2008, but at least still in significant operation.

The Syndicat National des Professionnels Immobiliers (SNPI), another association of French real estate agents, concurs that buyer interest in the French housing market has risen since the summer, although the group anticipates no major recovery until the second half of 2010. Similarly, the nationwide real estate agency group Century 21 reports an increase of 14% in the number of sales in the third quarter of 2009 over the same period in 2008.

The report did reveal significant regional variations, however. House price falls were recorded in Languedoc-Roussillon, Limousin, Aquitaine and Brittany in the third quarter, while there were notable increases in Provence-Côte d’Azur and Poitou-Charentes, both regions that had recorded a significant reduction in prices in previous months.

Les Notaires de Paris revealed in its latest report that the housing market in France had picked up, but that this improvement was “selective”. In Paris, for example, the volume of sales for new builds had increased by a huge 40% since the first trimester, but sales of older apartments increased by a miserly 1.8%.

The organization which represents the country’s notaires, public notaries responsible for the legal aspects of real estate sales, said the fact that banks had started to lend again, coupled with low interest rates, had helped to restart the French housing market. However, it warned that a complete recovery would depend on the stability of France’s economy and the job market.

 

Originally published in the January 2010 issue of France Today.