Property Market Report - A Buyer's Market?
Wednesday 15 November 2006
After seven years of continuous growth, a clutch of surveys published within the last month all point to a slow down in the French residential property market, although most pundits remain optimistic about the outlook.
According to FNAIM, the French professional body of estate agents, prices remained stable during the third quarter of the year. So far this year, they say prices have risen by 4.5%, against a national average of 10.3% in 2005 and 15.5% in 2004.
Within the regions, the biggest slowdown has occurred in the South West where houses prices have actually started to drop. Prices in the South East are also fairly stagnant.
The same trend was found in a joint study by 'Boursorama' / 'PAP', the Internet bank and property listings magazine, as well as in a recent market report from the professional body of Notaries, 'Chambre de Notaires'.
However, in both cases there was evidence that, due to a lack of new build opportunities, city centre prices were resisting and the price of older apartments, in particular, was continuing to rise at a strong rate.
In terms of the outlook, opinion is divided. A gloomy prognosis for the next few years is given by the economic consultancy group 'BIPE', who consider that prices will drop by 4% in 2007, with no prospect of a significant recovery until 2010.
However, FNAIM and other major agents remain more upbeat. Although they do not make any forecast beyond the end of this year (+7%), FNAIM take the view that all the major indicators are positive.
They argue that credit conditions remain favourable, the economy is showing good growth, and demographic factors are driving the need for more homes. Ironically, they also believe that a slow down in the market itself is bringing more buyers into the market.
Nevertheless, the number of properties for sale on the market continues to increase and it remains to be seen if the large portfolio of properties held by the agents, as well as the massive new build programmes currently taking place in France, begin to have a more significant effect on prices.
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