Resale Properties in France: the upturn should prolong in 2011
The recovery of prices and the high number of sales in the resale property market in France has every reason to continue into the beginning of next year, thanks to interest rates that should remain low, predict France’s notaries.
France’s notaries predict that the recovery of prices and the high number of properties being sold in the resale housing market in France (confirmed by data from the second trimester) has every reason to continue into the beginning of next year, thanks to interest rates that should remain low. In the second trimester of 2010, the Insee index of the price of old apartments, which was published this Tuesday, increased by 2.2% in three months and by 6.3% in a year, while those of old houses increased by 2.3% in three months and by 5.7% in a year.
According to the notaries “there is no reason, considering the present state of affairs, to believe that at the start of 2011, this tendancy will be reversed: in fact the interest rates should remain low, continuing to boost buyer solvency.”
The watchdog Credit Logement/CSA announced on Tuesday that the interest rates of the competitive sector, already at their lowest since after the Second World War, once again dropped in October to average out at 3.26%, compared to 3.30% in September.
The notaries added that the amount of resale property sold in the whole year should “largely surpass” the predictions bandied about in July of 700,000, reaching a figure of between 720,000 and 750,000, and perhaps even more. “The figure of 750,000 could even be surpassed if a significant number of sellers decide to sell quickly in order to avoid heavier taxes regarding capital gains property, as the present tax rate of 28.10% is due to be increased (there is no capital gains tax after 15 years).” The amount of activity in the market diminished to less than 600,000 in 2009, while in the years before the crisis it was in the bracket of between 800,000 and 840,000.
Cutbacks of tax benefits
Concerning French new build property, in a market that is always monopolised by the housing association investors, the notaries are banking on a triumphal end to the year, particularly in the sale of apartments. The amount of new apartments sold in the second trimester has increased by 5.7% in a year and the notaries believe that that number should reach a minimum of 110,000 by the end of 2010.
“The prospect of a reduction in certain tax benefits from the 1st of January 2011 is without a doubt the cause of the marked increase in the number of sales of property for future completion from now until the end of 2010,” state the notaries, referring to tax incentives within the context of the “Scellier” law for investors.
They state that, according to the Federation des Promoteurs Constructeurs (FPC), on average the price of new apartments in the second trimester increased from 5.7% in a year to 3.556 euros/m2. On the other hand, still according to the FPC facts, the price of individual houses has dropped 4.2% in the same period to an average price of 237,300 Euros, as this section of the market is more competitive and less affected by the regulations of accessibility for handicapped people.
Whatever happens, whether in the new build market or the resale property market, the notaries remind us that the movements of prices and the number of houses sold remains extremely varied according to each region.
Tags: French notaries, french property market, investing in French property, tax benefits on French new build, upturn in French property prices
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Monday, November 8th, 2010 at
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