2012: a promising year for French property buyers
2012 could be favourable to purchasers of resale properties in France. A priori, their bargaining power would improve. Forecasts from Century 21 and Fnaim, unveiled on Tuesday 3rd January, were clear: in 2012, the market will experience a lull.
Century 21 predicts a decline in the number of transactions by 10% to 15% over the year. According to Fnaim, the activity of the real estate market could fall by about 15% to 700,000 transactions in 2012.
Tightening of lending criteria by banks, reform of the taxation of capital gains on real estate rental property and second homes from the 1st February 2012, found wait before each French presidential election (due in May 2012)… These factors combined create a rather gloomy year for French property buyers (giving opportunities to overseas buyers).
In 2012, “there will be fewer intentions of sale, as households postpone their projects, especially if a sale of convenience, being necessitated by either a birth or a death, divorce or job transfer “, says the president of Century 21 France.
There is no indication that prices will actually decline. Also it is difficult to make predictions, even for professionals. Strong demand by those who can still purchase and supply shortages could lead to new price pressures, resulting in an increase of 2% to 3% for the year 2012, according to Century 21.
On the Fnaim side, they think that prices could decrease by 5% in 2012, because of tighter lending criteria, the shortening of the duration of debt, rising unemployment and declining consumer confidence , and the difficulties of French first-time buyers who cannot get financial help from their parents to secure the deposit.
However, the year 2011 was exceptional; the Ministry of Housing reported 832,000 transactions between October 2010 and September 2011. A record compared to previous years (784,000 in 2010, 585,000 in 2009 and 673,000 in 2008), which competes with the transaction level before the worldwide crisis (810,000 in December 2007).
Prices have also risen sharply: + 7.3% over the 2011 year on the whole of France, according to Fnaim, + 6% according to Century 21. “We returned to the same price level as in 2007,” says Mr. Pallincourt (Fnaim). In Paris, the annual increase reached 22.7%, depending on Fnaim, and 12.57%, according to Century 21.
This price increase has excluded some purchasers’ social groups. “The increase in interest rates – from an average of 3.65% to 4.2% in one year – the tightening of credit conditions, coupled with rising house prices has excluded an entire population from the market, according to Century 21. In 2011, at the national level, they recorded 11% of buyers from middle class and less, and 16% of buyers under 40 and less, while the group of senior citizens has increased by 20%. This population often has a property and can sell it to finance a purchase.
By looking in detail, the market started to decrease from the third quarter 2011, prices throughout France were down 2.2% compared to the first half year, according to Century 21. In the fourth quarter, prices were unchanged from the third, according to Fnaim.
According to Matthieu Cany from Sextant French Properties; “In 2011, 50% of Sextant’s buyers bought a main residence, 30% a holiday home and 20% an investment property which is most of the time a French leaseback. Thanks to our independent French mortgage department we are also able to work around banks criteria and have successfully secured 82 French mortgages in 2011.
At Sextant we believe that 2012 will be a good opportunity for overseas buyers to buy a holiday or permanent home with more buying power than ever. Our forecast projection for 2012 is for an increase of international buyers choosing to invest in France because of the financial stability accompanied with its solid property market.”
Tags: 2012 french property, French property buyers, french property market
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