Property sales in France picked up in 2016 but demand from British buyers is down

The last year has been strong for the French residential property market with total sales up by 15%, the highest level since 2008.

According to the latest report from the Notaires de France buyers have sensed the end of falling prices and are taking advantage of the historically low interest rates to make the most of the market.

The report estimates that prices increased by around 0.5% in 2016 and the Notaires are forecasting a rise of around 2% for apartments and 2.7% for houses in the coming year.

But there has been considerable regional variations. Some locations, such Bordeaux, Nantes, and Toulouse have seen prices rise more, by up to 6%. They are predicting price rises of around 2% to 3% in 2017.

Agents are also reporting a positive year. Leggett Immobilier, which has agents across the country, said it has recorded a slight increase in sales over 2015 which was a record year.

But demand from British buyers seems to have taken a dent due to the result of June’s vote to leave the European Union. The firm report that demand from the UK was as strong as ever in the first six months of the year but since then it has seen a reduction in enquiries of 19%.

However, those British buyers who have been looking at properties in the latter half of 2016 have been more serious. ‘Sales to British buyers dropped slightly in the second half of the year, but nothing too significant and British buyers still see French property prices as being incredibly attractive,’ said chairman Trevor Leggett.

‘The truth is that currency fluctuations have more effect on sales than economic or political conditions. We’ve also seen a change in buyer profile with an increase in the percentage of people looking for holiday homes and a decrease in the percentage of retirees,’ he explained.

‘The combination of low prices and cheap financing has led to an increase in the number of sales to other international buyers. There have been increased sales to American, Australian and, in particular, Scandinavian buyers. They spend more, too,’ he added.

Leggett expects growth to continue in 2017 even although there are general elections in France, the Netherlands and Germany and political uncertainty can affect the property market, especially in the weeks leading up to a national vote.

‘France is made up of thousands of micro markets and some rural areas may continue to see low demand and stagnant prices. It’s notable that buyers are still looking for a bargain and vendors must price their houses correctly to record a sale,’ Leggett said.

He predicts that rural towns and villages where prices are still low and there are plenty of great houses to choose from such as Brittany, Normandy, Poitou Charentes and Languedoc Roussillon could be hot spots in 2017 but he believe towns and villages around Bordeaux could see a ripple effect from the city itself.

Tim Swannie, director of buyer’s agent Home-Hunts, has also seen demand from British buyers fall this year. ‘The number of enquiries from UK clients has reduced this year which is understandable; some people are waiting to see what happens with the Brexit drama, and others have been put off because of the pound to Euro exchange rate,’ he said.

However, his firm has also had a number of British clients buying specifically because of Brexit as they want to make sure they own a property in the EU before the UK officially leaves.

‘There have been two specific areas where we have seen a rise in enquiries from the UK, Paris and also the French Alps. The majority of these enquiries come from clients who work in finance. Some are looking to relocate closer to Paris or Geneva and others are buying for investment purposes, with a view to relocation in future.

‘There’s no arguing that Sterling is low at the moment against the Euro, so the timing isn’t ideal for UK based cash buyers. However, we’ve found many clients are taking mortgages instead. Many French banks offer what is called a back to back loan whereby you can deposit your money in Sterling with them and then you borrow the same amount in Euros. This is a perfect solution to avoid taking a hit on exchange rates. Then, when rates improve in future, buyers can choose to pay off the mortgage,’ Swannie explained.

‘Many clients are specifically asking us about UK sellers because of the exchange rate to Sterling. British buyers are generally quite flexible at the moment if they are changing their money back to Sterling. Having said that, as a buyers’ agent, we’ve found that most owners are flexible currently. It’s certainly a buyer’s market at the moment, and with the uncertainty of Brexit still looming in 2017, and the upcoming general election in France, we expect it to remain that way into next year too,’ he added.

The majority of clients at the moment are coming from mainland Europe, specifically Scandinavia, Benelux and also Germany. The firm is also getting a lot of interest from Swiss, American and Middle Eastern clients.

All areas have been quite busy, but the real stand out areas in terms of sales have been Cannes, Sainte Maxime to Saint Tropez, Montpellier to Narbonne, the Dordogne, Chamonix, Morzine and Paris.

The firm has agreed sales on all kind of properties ranging from small renovation projects around €600,000 through to a €7.2 million apartment in Paris and a €19 million contemporary villa in Saint Tropez.