Real Estate: Ups & Downs

It has been widely acknowledged that 2010 was a good year for the French housing market. Prices did not dive as they did elsewhere in Europe; buyers began to creep back onto the scene; and in some parts of the country properties sold like hot croissants. But this was not the case throughout the country, as a look at the year’s winners and losers makes clear.

The latest findings from the National Federation of French Real Estate Agents (FNAIM), released late last year, showed that France had begun to emerge from the crisis besetting the international property market since the financial crash of 2008. The FNAIM figures revealed that, despite some drops in prices in certain regions of the country, generally speaking property prices had stabilized.

The federation also predicted that by the end of the year 2010 there would be a 2–3% rise in prices, with sales increasing to some 700,000—thus regaining the level that was reached in 1999.

The upbeat statistics have now been mirrored in research done by French notaires, public notaries who are mandated as the legal representatives involved in all property sales and purchases in the country. In their latest report on the health of the French housing market, released at the end of last year, the notaries estimated that sales in 2010 would reach up to 750,000—a significantly higher amount than in 2009, when sales did not even top 600,000. Their report also singled out areas of the country where housing prices had shot up and, at the other end of the spectrum, fallen dramatically.

Some surprises

The biggest winners were in the départements of Creuse, in the Limousin region of central France; Haute-Loire in the Auvergne region, and in the southwestern département of Ariège, in the Midi-Pyrénées—all lesser-known, rural areas of the country, where average prices have risen by more than 15 percent. (The notary figures are for house sales only, and do not include apartments.)

Less surprising, Paris and the surrounding Ile de France region were also on the winning side, as well as parts of Aquitaine and Brittany, both in western France, and PACA—the large and varied region officially called Provence-Alpes-Côte d’Azur—which all saw price increases of 2.5 to 6 percent—and those rises starting from some pretty high levels in the first place.

The biggest loser, in terms of prices, was Lozère, the northernmost département of the Languedoc-Roussillon region, where prices were down by around 10 percent.

The southwestern départements of Landes, Lot-et-Garonne, Tarn-et-Garonne and Dordogne have seen price reductions of between 5 and 9 percent, as has Deux-Sèvres, in the western region of Poitou-Charentes; Ardenne, in the northern Champagne-Ardenne region; Nièvre, in Burgundy; and Meuse, in Lorraine.

The notary report listed stabilized prices in the départements of Finistère, Morbihan, Calvados, Somme, Indre, Cher, Loir-et-Cher, Hautes-Pyrénées, Hérault, Hautes-Alpes, Jura, Doubs, Bas-Rhin and Moselle.

Changing world

Matthew Hodder-Williams, of the International Residential Department at the real estate agency Knight Frank, believes that most of the areas where the market has seen a substantial fall in prices are where the asking prices were probably unrealistic in the past.

“Values have fallen in areas like the Dordogne, but a lot of these areas are where there was the greatest growth beforehand, in 2007. A lot of sellers now realize that the world has changed, and they have adjusted their prices accordingly.”

He said prices in the Dordogne area were now “correct”, with small townhouses currently selling for between €250,000 and €650,000 while large country farmhouses usually command between €500,000 and €900,000.

“Changes in the southwestern France market over the last couple of years have made it possible for new generations of buyers to find their perfect home, either in the ever-popular Dordogne Valley or the increasingly fashionable Gascon plains,” says Hodder-Williams. “It’s clear that market conditions have weakened since 2007, with values having fallen by up to 30 percent in some parts of the region. But those properties that have been adjusted to meet current market sentiment are being sold at—or at least close to—the guide price.”

“One key issue facing the southwestern market is the current oversupply of similar properties, particularly within the €400,000 to €1.5 million range, which has further contributed to softening values within this price bracket.”

Shooting up

The exact opposite is driving prices up in areas such as the French Riviera, according to Alistair Buchan, of the Coast and Country real estate agency in Mougins, north of Cannes, who told French-Property.com that “prices for good, well-placed property continue to rise, simply because there is not enough of it, and the planning constraints on new construction mean that there is a shortage of supply”.

His remarks were backed up by Mike Braunholtz, sales director at The Prestige Property Group, who said that houses and apartments on the Côte d’Azur were selling faster than anywhere else in France. “We have had a very busy year in and around Nice, which seems to be the epicenter of all our big sales at the moment.”

The success of the property market in and around the glamorous and sought-after resorts of Nice and Cannes is not difficult to fathom, but what makes prices shoot up in areas such as Ariège?

Located on France’s southern border with Spain and Andorra, Ariège is a rural and largely unpopulated département with wild countryside and stunning scenery, although it does boast the ski resort of Aix-les-Thermes. In recent years the area has become increasingly popular with people looking for a quiet life, says Sue Parr, of the agency Midi Pyrenees Properties, based near the town of Foix.

It is this influx of new buyers, coupled with a continual improvement in the local economy, that experts believe have started to push prices up. “People come here for the way of life,” says Parr. “It’s very relaxed, it’s agricultural, the people are very friendly and the mountains are very close, so there’s skiing in the winter and walking in the summer.”

“We have a lot of clients from all over, including England, Belgium, Holland, America and New Zealand, looking for holiday houses or permanent homes,” she adds. “We have noticed that there’s been a real change since last year, and that more people are looking for permanent homes. And the clientele is getting younger too, with many with young families.”

Prices for a four-bedroom farmhouse with land start at around €195,000, with village houses with a small garden still attainable for under €100,000. A more substantial €450,000 can buy a large, fully renovated farmhouse with two rentable gîtes.

 

Originally published in the January 2011 issue of France Today