No french housing market crash on the horizon insist leading economists

IN an interview with Capital.fr, the French equivalent of The Economist, Alexandre Mirlicourtois from the research group Xerfi insists that the french housing market is not likely to crash.

According to Mr. Mirlicourtois, a senior economist at Xerfi, the property market in France will finish the year down two to three percent.

He predicts that it prices will drop a further 5% in 2009.

Certain commentators have said that the market will drop a further 30 to 40% over the next five to seven years.

Asked is he agreed with this Mr Mirlicourtois said that "to me this view seems a little too pessimistic. I envisage a drop of 15% over the next few years with a return to an increase in house prices in 2011".

Mr. Mirlicourtoisis is optimistic. "I don't believe there will be a french housing market crash. We are seeing a considerable drop in house prices at the moment. The volume of house sales is down significantly so the current drop in prices is what the market needs to give it a boost."

He goes on to say that "vendors needing to sell now are helping to stimulate the market by dropping their asking prices. Others who are prepared to wait are less inclined to drop the price of their property".

He believes that a drop of 15% will be sufficient to restimulate the market because other market fundamentals remain strong.

So, what are these fundamentals that he refers to? He goes on to explain why the French property market remains stronger than some of its European neighbours.

"The real estate market in France is much healthier than in Spain or the UK . For ten years, we were lagging behind those countries that have experienced strong growth, particularly in construction. But now we realize that there were many excesses associated with such huge growth: there are now a million unsold new homes in Spain, ten times more than in France. In addition, we have a population unparalleled in Europe which will support demand for new housing for many years. Finally, the situation of French banks still acceptable".