Strict mortgage policies have helped insulate the French property market from large declines, although, prices and construction did suffer in the recent downturn. While recovery has been uneven across regions, new and existing home sales improved in the first quarter, with foreign buyers increasing their presence in France’s second home market. See the following article from Property Wire to learn more.
The residential real estate market in France is slowly recovering from its low point at the end of 2008 although price growth is variable, a new focus report shows.
In the first quarter of this year only the new apartment sector saw price increases but in the 12 months to the end of March average new single family homes increased by 5.9% and apartment prices rose by 6.9%, the report from Chesterton Humberts shows.
However, performance in the resale market over the same period has been less impressive with average prices rising only 2.6% for single family homes and just under 1% for apartments.
At a regional level, the strongest price growth in the new build sector over the past year was recorded in Corsica where average prices for single family homes rose by just over one third and for apartments by nearly one fifth.
But much of the gain in the single family home segment was wiped out in the first quarter of this year when prices fell by a shade under 20%. The largest price drop was recorded in the Champagne-Ardenne region where average values for new single family homes fell by almost 24% in the 12 months to the end of March.
The most expensive single family homes are currently found in the Paris and PACA (Provence-Alpes-Coted’Azur) regions while the cheapest properties are in Limousin and Bourgogne. Paris and PACA also top the list for the most expensive apartments.
The report also shows that the best performer in the regional single family resale sector in the 12 months to end the end of March was Aquitaine, up 5.2%) while in contrast both Picardie and Nord-Pas-de-Calais saw double digit falls.
In the resale apartment sector, Lower Normandy was the strongest performer over the period with prices climbing 12.9%), while six regions, Limousin, Franche-Comte, Picardie, Languedoc-Roussillon, Champagne-Ardenne and Lorraine all recorded double digit price falls.
France did not experience the steep decline in prices seen in neighboring Spain or the UK thanks in large part to a more tightly controlled mortgage market which has helped to limit the volume of distressed property sales. Where forced sales have occurred they have mainly been due to non-financial reasons, the report points out.
But overall even in the prime locations, asking prices have fallen back by between 10% and 20% from pre-recession levels.
It also shows that the recession has hit house building. Since peaking in 2007, the volume of house building annually across France has been steadily reducing. But there are signs that is changing suggesting that developer confidence is growing. Rhone-Alpes has seen the highest level of house building over the past five years.
Residential property sales in France peaked in 2005, well before the global recession. However in 2008 they fell by nearly 20% compared to the previous year followed by a further 7% decline in 2009 to stand at just under 74% of the 2005 peak transaction level.
The market has begun to strengthen this year with data for the first quarter confirming an increase in annualized sales in both the resale and new homes markets.
The most popular regions for new homes on a sales’ volume basis are Ile-de-France, Rhone-Alpes and PACA. However, whilst Ile-de-France and Rhone-Alpes have seen new homes’ sales rebound strongly over the first quarter of 2010, the PACA region continues to suffer and transaction volumes fell again in the first quarter of the year.
Second home ownership varies between regions from 22.3% in Languedoc-Roussillon to just 2.4% in Alsace. Foreign ownership of second homes has risen by over 50% since 1997 and now represents 9.1% of the second homes’ stock in France. UK buyers dominate with a share of 26% followed by Italians at 9%. Approximately 60% of foreign owned second homes are single family properties.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.