Figures released from the National Federation of French Estate Agents (FNAIM) show 0.8% growth in the price of French property for 2012 versus an increase in 2011 of 7.3%, the smaller gain of 2% in 2010 after the losses of 5.2% and 3.7% in 2009 and 2008 respectively.
There are large regional variations with central Paris seeing 16% price progression for the year and at the other end of the scale Brittany -7.9% and Normandy -11.7%. Slight increases were recorded in popular destinations such as the Alps and the Cote d’Azure of approximately 1%. As a guide, the average increase in French property over the last 10 years has been 5.30% annually.
In 2012, there were 150,000 less domestic transactions, taking the total for the year to 655,000. Whilst you can explain this 30% drop in terms of perhaps boosted 2011 numbers attributed to the Loi Scellier (a government incentive to buy new build property), the fact remains that this drop is important and perhaps points to a an annual transaction level of 500,000 per year in the coming years for primary residence purchases.
When we remember that second home purchases make up 15% of the market and buy to let another 16%, 800,000 transactions seems to be the natural rhythm if France is to build the 350,000 houses it needs to per year. If the ultra-low rates persist with an economic pick-up it will be the buy-to-let side of the market which continues to grow.
It looks as though French property prices will remain stable in popular areas throughout 2013 with falls in less well connected and rural areas. When we take into account the falling numbers of transactions, in spite of the support given to the market by ultra-low interest rates, together with predictions form various agencies such as the FNAIM and Standard and Poors, the general consensus is for a slight fall in in the average price for the next year.
The good news for those seeking to buy in France over the next year is the preparedness of sellers to reduce the sale price of their property. Only 23% were not prepared to reduce their price, with a definite yes coming from 29% and a “yes if necessary” from the other 48% according to the FNAIM.