On the up
The latest Notaires de France report shows that the French property market was extremely dynamic in 2016, with sale volumes up by 11% during the past year to reach the highest level recorded in the last 10 years.
Two main reasons are thought to account for this increased activity, namely low interest rates and the fact that the market is catching up after experiencing three years of a ‘wait and see’ attitude.
The fact that sale volumes continue to increase confirms the recovery that started at the beginning of 2015. The number of transactions over the 12 months to the end of September 2016 across the whole of France is estimated at 838,000, an increase of 11% compared to the figure recorded the previous year (755,000). At the end of September, the estimated number of property sales was up by 15.1% year-onyear in Île-de-France (160,400 sales) and by 10.1% elsewhere (677,600 sales).
However, while sale volumes have reached their highest level in 10 years, prices have not returned to those of the market peak seen in 2011. Nevertheless, house prices have risen by 2% from Q3 of 2015 to Q3 of 2016. Only St-Étienne and Le Havre have recorded a year-on-year decrease (-1.9% and -1.2% respectively), following increases of 2.3% last year. Relatively stable house prices were recorded in Toulon, Montpellier, Marseille, Aix-en-Provence and Reims (movement between -1% and +1%), while the biggest increase in house prices was in Rennes, rising by 7% to reach €215,000.
Apartment prices have also increased by 1.4% year on year, following a period of gradual decline since mid-2012. This increase was mostly seen in Île-de-France, where prices have risen by 2.7% year on year. Elsewhere, prices have risen by 0.3% and remain at their 2009 level. The biggest increase in apartment prices was in Bordeaux (+4.1%) to reach €3,200/m2.
It is uncertain what will happen to the
market in 2017, the year of the French presidential election, but there are several possible scenarios.
If the exemption from paying capital gains tax on second homes was reduced to 15 years from 22 years, vendors may be encouraged to come back to the market, with prices settling as a result. If there is a reduction in taxation on income earned from property, investors may return to the market which may cause prices to increase. Any changes to France’s wealth tax ( impôt de solidarité sur la fortune) may affect the luxury property market.
The report also gives an indication of what buyers can expect to be able to purchase with their personal budgets. You might expect to pay €80,000 for a studio apartment in Nice or Lyon, or €150,000 for a two-room apartment in Cannes, for example, while €500,000 could buy a six-room house in Nantes.