French Property Lures Foreigners

The Eurozone debt crisis has pounded home values across the region, but prices are rising in many of France’s most sought-after locations, in no small part due to …

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The Eurozone debt crisis has pounded home values across the region, but prices are rising in many of France’s most sought-after locations, in no small part due to the continued interest of foreign investors. Nice, Paris and the Cote d’Azur are all seeing gains and buyers from Asia, the Middle East, Great Britain and Eastern Europe are helping drive many sales. The French government has helped by making it easier for foreigners to get attractive purchase options and reasonable mortgage rates. Experts say low interest rates alone are enough to keep things moving in the country for the next few years, but are quick to point out favorable exchange rates don’t hurt. For more on this continue reading the following article from Property Wire.

The French property market has been a good investment for many foreign buyers over the last year with prices of flats and houses rising in the most sought after areas, it is claimed.

Prices have risen 4% and 8% respectively in Nice and the Cote d’Azur, whilst prices in the Paris region have risen by between 3.8% and 6.2% for houses and flats, according to data release by government controlled Notaires de France.

At the same time, the numbers of UK buyers in the Paris region has remained stable at around 2% of all transactions, according to data from BNP Paribas, whilst for France overall, the percentage of UK buyers dropped slightly from 11% to 9%.

Buyers from the Middle East, Asia and Eastern Europe are regarding the Parisian market as a good buy as it is regarded as a safe haven, a bit like London, according to Tim Harvey, managing director of French mortgage brokers Offshoreonline.

‘In Paris, as in London, we can see the importance of the international buyer who has certainly contributed to the overall buoyancy of the market. Likewise, in Nice and the surrounding areas, Asian and Eastern European buyers will have provided underlying strength to the market,’ he said.

Elsewhere in France, the story is more mixed, with prices stable or rising, but by more modest amounts, these areas not benefiting so directly from the overseas buyer.

One contributing factor to the health of the French mortgage market is certainly the willingness of the banks to lend. Whilst for the UK buyer the story has been one of disappearing banks, in France lenders have stood firm and continued to offer attractively prices mortgage funding.

John Busby, director of French Private Finance, many banks have now cut margins and rates in response to dramatic falls in the main benchmark rates. ‘Non-residents can now benefit from a 25 year fixed rate at 3.75% or a variable rate for the same period from 2.7%. We have seen an increase in the number of applications sent to the bank looking for these new conditions, which is bringing renewed vigour and confidence to the property market in France,’ he said.

‘Many of our property partners are also reporting increasing numbers of enquiries as buyers embrace the extremely low interest rates and stability brought about by the unlimited bond buying scheme announce by Mario Draghi the new president of the European central bank,’ he explained.

He believes that the low interest rates are going to sustain the property market in France over the next few years, with prices likely to remain stable. ‘There certainly are bargains to be had in the current climate where a lack of domestic buyers is opening up opportunities for British and international buyers to snap up desirable properties,’ he added.

Harvey paints a similar picture. ‘We can source variable rate euro mortgages for expatriates from 2.3% with 10 year fixed rate euro mortgages available from 3% and interest only mortgages from 3.25% from a number of banks, so there is no shortage of choice of lender or product. Whilst each lender will have their own underwriting requirements, the overall picture is a healthy one with plenty of choice,’ he explained.

The Alps, Paris and the Cote d’Azur remain the most popular with British buyers with 75% of French Private Finance clients buying in those areas. ‘Many people are astounded at the low rates on offer in France and the possibility to lock in your rate over 20 years at 3.6% fixed or 2.4% variable with loans available at 80% of the price of the property,’ said Busby.

Exchange rates also affect who is buying property in France. For the British buyer the position is now healthier than it was some months ago with the pound trading at around €1.25 from €1.14 a year ago, so giving buyers an effective price discount.

For dollar linked currencies, exchange rates have also moved broadly in their favour over the past 12 months making property cheaper for the dollar based buyer, but the euro is now strengthening again to remove some but not all of that advantage.

This article was republished with permission from Property Wire.

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