Bargains abound in new build french property

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.

Oversupply

The authors of the study point to the strong effect of the rising stock of unsold homes. There were 100,000 unsold units at the end of 2007 when sales of new homes plummetted.

But rising stocks of new housing and a sharp fall off in sales are all that's needed to spark a downturn in the new homes market.

A sluggish economy and household solvency coupled with the lack of property speculators could result in a worse than expected time ahead for those with new property for sale in France.

Construction will slow down this year

President of the French property development company, Promogim, Mr Rolloy Christian said "2007 was a long year and all indications are that we can expect a further drop in sales in 2008".

"Production of new housing is likely to fall by 15% in 2008 and is unlikely to recover in the next three years. " he explained during a recent press conference.

According to HSBC, prices of new houses in France are expected to drop by 4% over the whole of 2008 and by a further 6% in 2009.

HSBC believe that "the drop in the construction of new houses will not be enough to halt the price decline. It will also need an improved economic outlook in developed countries" explain economists at the bank.

Of course, one man's meat is another man's poison. For those who want to buy a new french property the housing market for new builds will be well worth a closer look over the coming months.