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2017 property sales in France to hit one million?

Published: Thursday 15 March 2018

By Adrian Bishop

The French property market has seen record sales during 2017, with foreign buyers contributing to the strong demand, particularly in holiday hotspots.

Annual sales reached a record 958,000 in the year to October 2017 and may hit one million when the full-year figures are confirmed, sector experts predict.

It all means that 2017 may turn out to be an exceptional year for the French property market, according to market analysis from two leading bodies.

Britons and Italians head foreign demand

Data from Notaries of France shows most foreign demand over the 10 years to 2016 came from Britons on 33% with Italians second on 14% and Belgians third with 12%. Scandinavians were fifth on 5%.

In the tourist areas of Provence, the Cöte d'Azur and Corsica, Italians make up the highest proportion of foreign buyers, but the British and Scandinavians are catching up, say French notaries in its January 2018 French Property Market report.

In 2006, 42% or two out of five (42%) property buyers in the region were Italian, with 18% British and 13% Scandinavian.

Three years later, the number of Italian buyers had hardly changed at 41%, with the British falling to 9% and Scandinavians 7%.

Moving on to 2016, the proportion of Italian buyers shrank to one in five (20%), with Britons and Scandinavians both on 14%, according to the latest analysis by Notaries de France.  In addition, the number of German home buyers also rose 5%.
French property house
Type of property purchased

The type of property purchased by different nationalities varies greatly. In 2016, 95% of Italians bought older apartments, 80% of which were studios and one-bedroom apartments, which are among the least expensive properties.

On the other hand, 40% of Britons and 30% of Scandinavians purchased older houses in 2016, with most having six or more rooms.

Record property sales

Across the whole of France, in the 12month to the end of October 2017, property sales hit an all-time record of 958,000. There were record rises in the departments of Bas-Rhin (35%), Landes (33%) and Charente-Maritime (29%).

Notaries believe the French property market is not developing a bubble, but has instead experienced rising demand following sluggish performances from 2012-2014, in particular.

Interest rates are low and on a downward trend, while In the French Provinces, for example, rises in property values are still mostly moderate.

There is likely to be continuing strong demand going forward and the sector could peak in 2018, say the notaries in their January 2018 French Property Market report.

Values of older apartments have risen 3.9% in the year to February 2018, slightly outpacing prices of older houses, which rose 3.1%.

Paris property values

In Greater Paris, second-hand property prices rose 4.8% in the year to the third quarter of 2017. Apartment values rose 7.8%, while house prices rose 2.7%. According to prices from pre-contracts, older apartment values could soon reach around €9,200 per square metre.

In the French Provinces, older properties prices rose 3.2% on average, with apartment value up 3.9% and houses rising 2.8%. The data is from Banque de France.
Boredeau property

Bordeaux tops city rankings

Bordeaux now tops the ranking of cities with more than 150,000 inhabitants with prices per square metre for older apartments at €3, 730, overtaken Nice, which is just €10 per square metre less. Prices in Bordeaux have risen 11.9% in the last year, more than anywhere else in France. This has been boosted by the new TVG high-speed train, which has cut the journey to Paris by 75 minutes to two hours. Lyon is in third place n €3,670/m2, followed by Lille on €3,130/ m2.

The least expensive cities in the French property market are still Saint-Etienne (€890/m2), Le Havre (€1,590/m2) and Angers at €1,870/m2.

Looking at the last 10 years, Bordeaux has seen the sharpest rise, up 46.6% and Saint-Etienne the biggest drop at 35.3%.

Taking into account older houses, Nice is most expensive, followed by Toulon with an average sale price of €359,800, up 3.7% year-on-year, Marseilles/Aix-en-Province on €341,500, up 9.4% and Lyon on €335,000, an annual rise of 3.1.

2017 was exceptionally strong for property buyers in France

Another new report, Europe's Housing Markets: Soft Landing In Sight, from Standard & Poor's (S&P) financial services company, agrees that France’s property sector performed exceptionally well in 2017.

“After an exceptionally strong year in 2017 for transaction volumes, the market is headed for a soft landing as affordability continues to deteriorate.”

Prices ‘set to rise 2% to 2020’

It predicts that nominal prices in the French property market will rise by 2% in 2018 and the next two years. Although it suggests that the proportion buy-to-let investment is falling, short-term rents are growing in importance.

“The proportion of buy-to-let investors continued to decline to 21% of the transactions from 30% in 2012. This reflects in part the growing importance of short-term rents: Paris for instance is now the largest market for Airbnb.

‘Million sales during 2017’

“For 2017 as a whole, the French solicitors association predicts that a million sales will be reached. This level of activity reflects essentially three factors: Persistently low interest rates, a recovering economy, and a bounce in potential buyers' confidence after the election of Mr. Emmanuel Macron as president in June.”

The year 2017 was in many ways an exception, and the French housing market is now likely to regulate itself back closer to long-term averages, says the report.

“Last year was special in the sense that the relief following the presidential elections, strong economic growth, and very favourable credit conditions provided a one-time boost to the market that is very unlikely to happen again.

“The rise in house prices was the strongest since 2012 and there are early signs that the trend is now levelling off. Meanwhile, the growth in housing loans also seems to have slowed in the final months of last year. First-time buyers are reporting increased difficulty in entering the market given the deteriorated affordability.”

‘Price rises concentrated in largest cities’

S&P believes the French property market will experience a soft landing in the coming year and a half. “Prices should continue to increase, but much less than last year, and it should be primarily concentrated in the largest cities, such as Paris.

“Similarly the trend in transactions should level off as deteriorated market affordability hits demand. We are not predicting a market crash, far from it, but a return to less exceptional conditions is now in train.”

If you are looking to buy property in France, find out more about the dos and don’ts of buying in France with our guide 

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