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French Property Market Update

French Property Market Update

In 2006, one in every twenty property sales in France was carried out with a foreigner, against one in 40 in 1998. The British are the most numerous, but their proportion has dropped from being 41% of foreign purchasers in 1998, to 32% last year. This can be explained by the fact that more people from other countries such as Spain, Germany, the Netherlands, etc are buying in France.

Whereas the rises in the prices of the real estate market have slowed down for the last few months, the notaries have noted stabilization in the transactions.

Established with INSEE, the price index of the real estate of the notaries published on 17 January 2007 reveals: for the old apartments, a rise of 12,2% in annual evolution in the third quarter of 2006, against 16,2% in 2005, and for the houses, a rise of 10% against 13,4% in the previous year.

"We are in a process of price stabilization", affirmed to Me Catherine Carely, while recognizing that "the deceleration is less important than we had envisaged". Alain Jacquot, head of the housing division of the National Institute of Statistics, specified that the prices "have been multiplied by two since 1998", increasing slightly more Province (97%) than in Paris (92%).

The figures of 2006 mark "a confirmed deceleration", he declared, whilst stressing that "the rate of growth remains very high". The figures of the notaries show a rather clear difference from those announced last week by the National Federation of the Real Estate (FNAIM), which stated a rise of 7,1% against 10,4% in 2005 and 15,4% in 2004.

"There will be a deceleration of the rise", indicated Me Bazaille, but "not a foreseeable crash". The situation is extremely variable according to areas, and "in cities like Paris, Nice and Grenoble one does not see how the prices could drop because of the lack of land", he added.

In addition to the price records per m2 in Paris and the mountain stations, the notaries note that the foreigners buy real estate in France more and more.

In 2006, one in every twenty sales was carried out with a foreigner, against one in 40 in 1998. The British are the most numerous, but their proportion has dropped from being 41% of foreign purchasers in 1998, to 32% last year. This can be explained by the fact that more people from other countries such as Spain, Germany, the Netherlands, etc are buying in France.

The foreigners are expected to continue to buy properties in France for the next 20 years; most of the time they buy in the French countryside where prices are still reasonable. The foreigners who buy in France are usually looking at first for a holiday home which could then become a permanent retirement home after a few years.

Moreover, the arrival of low-cost air lines in certain provincial airports and the TGV tend to increase the prices.

About the Author: M. Cany works for Sextant French Property an English company specialized on the French Property market. The company work with a Network of English speaking French agents. Tel: 0207 428 7750

©M. Cany