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French Property Market ReportThe decrease in house prices accelerated in the last quarter of 2008, and prices are forecast to continue to fall over the next three years, according to FNAIM, the national association of French estate agents.House prices fell by over 5% in the last quarter, following a decrease of 3.5% in the previous quarter. As prices rose slightly in the first half of 2008, the annual average decrease in house prices was kept down to a comparatively modest 4.9%. Apartment prices across France decreased by an average of 1.2% in the year. FNAIM report that, on average, house prices were around 10% lower at the end of 2008 compared with the same period in 2007 (4th Qtr 2008/4th Qtr 2007). Apartments were around 8% lower than they were a year ago. However, there were large variations between regions. In the normally buoyant South East house prices were around 20% lower at the end of last quarter than they were a year ago, whilst those in the South West were also around 11% lower. In the West they were down 8.7% on a year ago. Within the major conurbations FNAIM report some surprising differences in apartment prices in 2008. Thus, largest falls in the year were recorded in Cannes, where apartment prices dropped by 13.2%, whilst at Toulon they also went down by 12%. Yet, in some other towns, apartment prices actually increased over the year, notably in Meaux, Angers, Limoges, and Annecy, each achieving over 6% growth in prices. The varying national picture illustrates the point that we continue to make within our French property market reports: the country is vast and heterogeneous, with many different local property markets in existence. The message from FNAIM is broadly similar to that recently posted by national estate agents Century 21, who also reported a major change in the market in the last quarter of the year. Whilst Century 21 reported that, overall, prices of houses and apartments fell by 6.5% in the last quarter, there were some disparities at a regional level. In Poitou Charentes and Champagne Ardennes prices fell by as much as 18%, whilst there was little difference in Aquitaine, where prices fell by nearly 17% in the same period. Laforêt Immobilier, another large estate agency group in France, also reported in December that buyers in many areas of France were successfully negotiating reductions of up to 20% on advertised prices. Whilst some care is needed when interpreting these figures, as the level of coverage of the agents concerned is not complete in all areas, the message is a clear one; prices are decreasing, and look as though they will continue to do so for some time to come. Market OutlookFNAIM consider that a decrease of around 10% in the price of French homes is likely this year. Although activity in the French property market may well increase from 2010, FNAIM consider property prices in France are still likely to continue to decrease throughout 2010 and 2011. However, like the French notaires before them, who last month outlined three alternative scenarios for the French housing market, FNAIM hedge their bets slightly on the precise outlook beyond 2009, by offering four alternative scenarios in their review. The agents most likely scenario is that the decrease in house prices will slow down to around 5% by 2010, and 3% in 2011, following cuts in interest rates, and in response to the build up of demand for property in France. Regional House PricesThe following table shows the average price of houses in each of the regions of France over the past three years. Once again, care should be taken in the interpretation of the data, which should be used only as a guide.
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