French property prices fall by 1% between January and March 2009

IN THE first quarter of 2009, sales of homes fell by 30% over the same period last year, according to Henry Buzy-Cazaux, managing director of the National Federation of Estate Agents in France (Fnaim).

Property prices are also down, after a further decline of 1% between January and March.

Mr Buzy-Cazaux says, "Interest rates have fallen and banks have relaxed their lending, but it is not yet sufficient to fully unlock the market. Banks do not always admit, but many of them still require deposits of between 10 and 30% of the total amount of the transaction.

Long-term loans of 25, 30 or 35 years, are now almost non-existant. This means that first-time buyers are effectively excluded. First-time buyers make up by close to 50% of housing transactions.

Banks should make further efforts. What's needed is a rate adjustment downwards on shorter term mortgages to levels that were available in early 2007 in order  to trigger house purchases.

Hopefully, we will reach this level by the summer.

The likely new rate cuts should be able to support activity in the second half of 2009.

This year we should be able to reach the level of transactions that were achieved in 2008 as house prices continue to correct.

Even if we are seeing a slight recovery in the number of house sales in some parts of France, negotiations will be tough between buyers and sellers.

As for 2010, much will depend on the economy. Unless we see a significant rise in consumer confidence and a slowdown in unemployment then people are unlikely to want to invest in property."