These are uncertain times we are living in. The shock of Brexit and the election of Donald Trump have left many potential investors skeptical about the future of the global housing market.
However, as American entrepreneur Mark Cuban once said, “wherever there is uncertainty, there is opportunity.” At least it appears that is the case for those seeking to invest in French real estate.
Three quarters of growth, high demand and record low interest rates have lead to price rises across the board in the French real estate market making overseas property loans more affordable than ever.
Growth
Franch housing market has been steadily gaining traction since the global financial crisis of 2008 and the last couple of years have been particularly prosperous.
Between Q1 and Q2 of 2016 Metropolitan France saw a 0.78% rise in housing prices, it’s second consecutive quarter of growth, according to the National Institute for Statistical and Economic Studies (INSEE).
According to the European Central Bank, the inflation-adjusted expansion in property values has moved above long-term averages and although the recovery in prices are at a “fairly early stage” there are no signs of a bubble.
Residential construction rates are also up. New housing starts rose by 3.13% to 173,448 units from January to July 2016 and in 2015 issued housing permits rose by 2.5% to 390,625 from the previous year, according to the Ministère de l’Écologie, du Développement Durable et de l'Énergie (MEDDE).
There was also an increase in total authorized dwelling over the same period by 12.56% to 242,730 units.
All of this combined with a favorable exchange rate and record low interest rates make this the perfect time to invest, particularly in upper end of the market where buyers could see profits of hundred of thousands of euros.
Demand
The good news for buyers is that the prices are being supplemented by rising demand. From January to July of 2016, the sales of existing homes were up 15.2% from the previous year according to Le Conseil général de l’environnement et du développement durable (CGEDD).
This combined with increasing transaction values and downward pressure on prices due to rental caps have created a perfect opportunity for investors looking for long term returns.
Paris and other metropolitan areas typically see consistent levels of demand, but the fact that over 80% of owner-occupied dwellings in France are bought with fixed rate mortgages ensures that France’s housing market is likely less prone to sharp upturns and downturns.
Where to Invest
While the global housing market has been in recovery mode for the past five years it appears that there is renewed interest in leisure properties and second homes, especially those in highly sought after getaway cities, such as the French Riviera.
Tight supply in these areas coupled with high demand from buyers around the world makes the long- term pricing outlook for these properties look favorable.
As city markets are becoming fully valued, buyers are seeking investment opportunities elsewhere. That’s why investing in prime real estate in getaway cities is a great choice, especially right now.
Property sales to international buyers increased by 29% to 17,785 homes in 2015 compared to 13,823 in 13,621 the two previous years according to a survey by French bank BNP Paribas.
Another major boon to potential investors is there are no restrictions on foreign ownership in France. Most properties are likely held in freehold (you purchase the title of the property and have the right pass it on to heirs and re-sell the property.) Freeholds likely come in two forms: co-ownership (with co-owners meeting, taking votes and keeping accounts) and volumes, used mostly for mixed-use developments.
Although undiscovered gems in these regions are becoming harder and harder to come by, they are still out there. Take for instance Pau, in the Southwestern France. Perfectly positioned for siestas of the beach or a day on the ski slopes, this region likely won’t remain a secret for long, especially considering that it boasts it’s own airport.
The holiday rental markets are competitive but if you act quickly you stand to see upwards of a 200% return on investment over the long term
“All the stars and planets are aligned to give customers a good base to buy from,” says Heather Byrne, Regional Manager at estate agents Leggett Immobilier for the Rhône-Alps.
In an interview with The Local, Byrne warns that if you are considering investing you shouldn’t wait. “The vendor is becoming stronger as people are looking to buy. People need to get their property purchase in now- it’s an absolutely fantastic time to buy.”
