No property market crash expected in France if banks make an effort

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.

Asked if the summer marked the beginning of turning real estate,  Jean-Fabrice Mathieu said "Not really. According to our national index, prices were actually in a declining trend in August, but to a very limited extent, to -0.42%.

The market is rebalancing supply and demand. Sellers are adjusting their prices slightly under pressure from buyers who anticipate a decline for several months to come.

Nationally, prices have fallen by only 1% since the beginning of the year. Of course, the french property market is primarily local, and some cities have seen much more marked drops. "

When asked if he was expecting a crash in the coming months in French property, he replied, " Some elements are of concern, such as a drop of 15 to 20% in the number of transactions, but not enough to provide a real skid.

The main risk comes from the funding difficulties faced by buyers. Many households abandon their proposed purchase because of the sharp rise in interest rates and find it increasingly difficult to qualify for housing loans.

In short, there will not crash if banks are make an effort to regain new customers. For me this is more a financial crisis than a housing crisis: demand remains very strong."

Seller are interested in how this analysis impacts the sale of their property. Mr. Mathieu says that ads stay longer online.

"The average is now 90 days against 75 days last year.

It is a moderate increase, which makes me say that any decline in prices will certainly not beyond 20%. So, how are property developers and estate agents in France affected ?

Developers are acutely aware of the difficulties that current market conditions represent to them, but paradoxically, they have an even greater online advertising presence in an effort to boost house sales.

We will continue to monitor the number of estate agent bankruptcies in the coming months. Further closures are expected in sectors where prices are falling sharply. Despite these uncertainties, I remain confident."