The highs and lows
On the whole, 2016 was a dynamic year for the French property market, according to the latest report by Notaires de France. Analysing the property market in the third quarter of 2016, the report reveals that an estimated 843,000 transactions were completed in the 12 months to the end of October, representing a year-onyear increase of 9%.
Several factors were shown to influence the market, including interestfree loans, relative price stability in major towns and attractive interest rates. The latter is thought to have helped boost buyers’ purchasing power by 29% over the last eight years.
Property prices continued to rise, following trends first noted at the start of the year. In the third quarter of the year, apartment prices had risen by 0.8% and house prices, which had fluctuated slightly, bounced back, increasing by 1.3%. This rise meant that for the third consecutive quarter, prices rose year-on-year by 1.6%, with a more marked increase for houses (+1.8%) than apartments (+1.3%).
However, this upward trend has not been seen across the whole country. Annual trends regarding resale apartments outside of Île-de-France are mixed. For example, prices in StÉtienne and Dijon fell by 2.9% and 4% respectively, while prices remained stable in Besançon, Grenoble, Marseille, Montpellier, Nice, Orléans, Rennes and Tours. Meanwhile, a steady rise of 2.5% year-on-year was noted in Toulouse, Lyon, Brest, Toulon, Reims, Strasbourg, Lille and Le Havre. Bordeaux recorded the biggest price increase of 9.8% for resale apartments, followed by Nancy with an increase of 5.6%.
The outlook for 2017 is positive: based on the number of preliminary contracts across France, the price index projection for the end of February 2017 suggests this upward trend will continue. Trends for resale apartments show an increase of 4.5%, which would mark a return to the price levels of 2014, while a rise of 5.7% in resale house prices would bring prices to the same level as in 2012.
In addition to lending rates, several other factors will impact the property market, including government schemes, such as the Pinel programme which encourages rental investment. However, a return to the exemption from capital gains tax after 15 years of ownership could stabilise prices and attract buyers.