The year 2012 could be favourable for those wishing to purchase properties in France. Importantly, it seems that buyers’bargaining power will 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 drop of about 10% to 15% in the number of transactions over the year. According to Fnaim, real estate market activity could fall by about 15% to 700 000 transactions in 2012.
A combination of the tightening of bank lending criteria, tax reform for capital gains on real estate rental property and second homes from the 1st of February, the waiting game before each presidential election … Several factors have combined to create a rather gloomy year.
In 2012, “fewer people will intend to sell, and households will postpone their projects, especially if the sale isn’t necessary (due to a birth or a death, divorce or job transfer ), warns the president of Century 21 France.
There is no indication that prices will actually fall. It is also rather 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 2012, according to Century 21.
As for the Fnaim, they think that prices could fall by 5% in 2012, due to tighter lending criteria, the shortening of the duration of debt, rising unemployment, declining consumer confidence , and the lack of most French first-time buyers who cannot get financial assistance from their parents.
The year 2011 was exceptional however; 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 activity level before the crisis (810,000 in December 2007).
Prices have risen sharply: + 7.3% over the year throughout France, according to Fnaim, + 6% according to Century 21. “We’ve returned to the same price level as in 2007,” says Mr. Pallincourt. In Paris, the annual increase reached 22.7%, according to Fnaim, and 12.57%, according to Century 21.
This price increase has excluded certain categories of purchasers. “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 have brushed aside a whole sector of the population from the housing market, who are now , financially insolvent according to Century 21. In 2011, at national level, they recorded 11% less buyers from the middle classes , and 16% fewer buyers under the age of forty, while the percentage of over sixties buying property has increased by 20%. This segment of the population often already owns a property and can sell it to finance a new purchase.
However if one looks closer, the market started to decrease from autumn onwards with prices throughout France down by 2.2% compared to the first half year, according to Century 21. In the last quarter of the year, 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.”