Property Purchase in France, an Unexpected Acceleration

Given the statistics published for the first quarter of 2017, property in France has recovered far faster than expected. Somewhat to everyone’s surprise, in fact. There are indeed two major factors that normally make this period quiet: the winter season and the presidential elections. What therefore sparked such momentum among buyers at the start of the year? This is what we will try to understand together.

The Erosion of Optimal Financing Conditions

2016 was indeed an exceptional year for property: 845,000 sales in total! Historically low rates played a part, and we covered the subject in depth in January: historic year for property in France.

The winter of 2016 also saw the beginning of the rise in interest rates. This was not really a surprise, they could not go any lower. At the same time, property prices began to rise as well, a logical consequence of historically low prices.

This situation served as the trigger for many buyers who did not want to wait any longer. And among these, there are increasingly investors.

Property Investment

Housing remains expensive in France when comparing its cost across Europe. Indeed, a study by the consultancy firm Deloitte published in 2016 ranked it in second position behind Great Britain. To give you an idea, it takes 3 years of income in Germany to acquire a 70 square metre property, 4 in Belgium, 5 in the Netherlands and 7 in France. Our neighbours across the Channel will need to wait 11 years before becoming homeowners.

France nevertheless remains a premier destination for property acquisition. Whether for a holiday home, a retirement property or simply an investment. With such conditions and a lack of alternatives for investment, more and more buyers are opting for property investment. 18% of acquisitions in 2016, whereas this figure was only 11% in 2014.

The Arrival of First-Time Buyers and the Impact on Prices

Another segment of the population made a strong return: first-time buyers. These represented 41% of clients at certain agencies compared to only 30% the previous year. This influx of new requests naturally drives prices higher. In Paris, for example, the number of queries increased by 20% while mandates fell by 20%. Logically, prices will continue to rise for some time and not only in the capital. While increases in Paris reach 5%, similar growth is noted in Lyon, Bordeaux and Nantes.

What About the Presidential Elections

The usual market slumber did not occur this winter. The wait-and-see approach typical of presidential election years should also be strongly attenuated. Given the conditions, it is possible that this will be virtually swept away. Furthermore, very few candidates addressed the issue of expensive housing in France, so no major changes can be expected after the elections. Our advice would therefore be to act as soon as possible to buy at the best price, if you are ready!