Whilst real estate prices have been resistant in major French cities, the situation is different in the rest of the country. In some rural locations prices have fallen for five years and second homes are the most affected type of property. What does this mean? Cheap French property is very much available.
This is particularly clear in some areas of the coast; in 2013, home prices fell in 60 of the 100 communities studied by the Notaries. A handful of 25 cities showed a decrease of over 15%. In five years, a quarter of cities post greater than 20% declines.
Initiated by the Fillon government, exacerbated by the election of François Hollande at the head of the country, increased taxation of second homes has had a big impact. It is true that there is a salty taste in the mouths of sellers, who must now wait twenty-two years to escape to the income tax and thirty years to avoid the 15.5% social security contributions.
But beyond the fiscal aspects, sales do not materialize as sellers refuse to take into account the downturn in the market and prefer to stay camped in their positions, while buyers have the feeling that time is on their side. Even the 25% discount granted by the government on taxes to pay on capital gains to those who sell before the end of August does not seem to have any effect.
In most cases vendors can hold on to their bluff, and hold on to it for a long time. This is why the game could go on forever. However there are some signs of improvement.
As prices visibly start to erode, the vendors for who time is an issue will being to falter and grant significant price reductions. Increasingly, the balance of power is not on the seller’s side.
In recent months, in some regions, for example in Brittany or Normandy, properties are selling and some vendors now accept offers of below 15% to 20% than the advertised price.
The largest declines can be obtained when the owner is forced to sell, following a separation or to pay inheritance tax. The real bargains are rare, but they exist.