french housing market

THE following is an extract from an interview on the current state of the French housing market given to Capital.fr, the French equivalent to The Economist, by the General Manager of Seloger.fr, Jean-Fabrice Mathieu.

He starts by saying that there has been a significant drop in transactions in a growing number of French cities. For Jean-Fabrice
Mathieu the tightening of credit conditions largely explains the slowdown in the market.

"People with French property to sell should stop asking for 10% more each year" says one industry expert in France. He says that sellers on this side of the channel should take a leaf out of our UK neighbour's book.

A recent appeal for realism on Rightmove.co.uk asked sellers to reconsider their asking prices in light of a faltering housing market to avoid stagnation.

If owners continue to demand unrealistic prices for their properties,he says,the French housing market will be exposed to the same risk.

AS FAR as the French housing market is concerned, this article in today's UK Guardian very nicely summarises a lot of the news on the french property market and economic factors that influence it that we've been telling our readers about in recent weeks.

The article also takes a look at the the markets in Germany, Italy, Spain and Ireland.

ANALYSTS have readjusted their forecasts downwards for house prices in France for 2008.

Empruntis, the insurance brokers, originally predicted a drop of three percent for the year. This is now more likely to be four percent.

Prices are expected to fall by between four and six percent in 2009. A drop of around 10% is expected between now and the end of 2010.

There are two main reasons for the revision of their forecasts.

SOME of the highlights from an article in The Connexion newspaper today indicate that house prices in the Dordogne are dropping faster than the INSEE or French government would have us believe.

The President of the FNAIM in the Dordogne says that asking prices are coming down by, he speculates, as much as 20%.

PROPERTY prices in France as a whole were found to experience slight corrections here and there but overall the housing market remain stable.

And there are no signs on that horizon that this situation will change, according to seloger.com in the latest edition of its monthly price barometer.

French property prices were found to have slowed in areas that had seen increases and were even seen to increase in places where prices has stalled.

THE Governor of the Bank of England, Mervyn King, yesterday announced that UK inflation is set to worsen. He almost seemed shocked by the gravity of his words in admitting that the outlook for UK inflation has "deteriorated markedly."

Consumer inflation is at its highest in 13 months as a result of higher food and energy prices.

These external factors, of course, affect economies globally but Mr. King says, about the UK specifically, that "the central projection is for growth to slow sharply in the near term".

THE price of new houses could experience a bigger reduction than older properties this year according to economists at HSBC, report Capital.fr.

In a recent memo HSBC say that "the drop in prices is likely to be greater than anticipated due to oversupply and a decrease in household spending power".

Readjusted, HSBC's expectations now show a decline of 3.5% in the first half of 2008 for new builds, against only 1% for older properties.

THE National Federation of Estate Agents in France (FNAIM) realease their first quarter analysis.

The main highlights:

Despite a 1% drop in house prices in the first quarter FNAIM are not expecting them to go into widespread decline.

A slight fall in interest rates is good news for borrowers.

This period brought a market correction that is expected to continue.

Prices are stabilising.

But double digit increases in almost all provincial cities are expected.

Ireland are heading for an even more severe downtown, the big French and German insurers are fleeing property debt in Spain but for France the outlook remains promising due, in part, to lower household debt than their eurozone neighbours.

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