Property prices and sales fall in France, especially in rural areas

Property prices in rural France have fallen considerably over the last four years, according to the latest figures published by Notaires.

In the four years to the end of June 2012 prices have fallen nationally by just 3% but this headline figure hides some notably falls in rural areas.

The worst hit areas is Creuse in the Limousin where prices have fallen 15.7% over the four year period, followed by a drop of 12.5% in Loir-et-Cher, a fall of 11.5% in Moselle, a fall of 10.8% in Correze, a fall of 10.6% in Tarn, a fall of 10.5% in Haut-Rhin, a fall of 10.3% in both Côtes-d’Armor and Bas-Rhin and a fall of 10% in Haute-Vienne.

Those departments that have continued to show positive growth over the past four years are Haut-Garonne, Gironde, Indre, Savoie and Haut-Savoie.

There has also been a substantial fall in property sales with both Notaires and estate agents reporting a slump of around 20% in the volume of sales.

FNAIM, the national association of French estate agents, reported that house prices had fallen by an average of 1.3% over the past year. But again this headline figure masks the fact that in rural areas prices have fallen by as much as 8% in the past year.

According to FNAIM figures prices have fallen 7.9% in Brittany, are down by 6.9% in Lower Normandy, down by 6.7% in Lorraine, down by 5.6% in Champagne-Ardenne and down 4.9% in Upper Normandy. Even in the traditional hotspot of Languedoc-Roussillon house prices are down by nearly 3% over a year.

Estate agents say that the property market has been hit by major fiscal changes that have been introduced over the past couple of years, most notably by the withdrawal of government sponsored interest free loans on existing older property for first time buyers.

Although mortgage rates are low at around 3.5%, the banks have introduced tougher lending criteria and buyers are more cautious, with the result that mortgage lending is down by a around 30% in the past year, a record fall.

Official government figures also show that fewer new homes are being sold. Data from the Ministère de l’Ecologie, du Développement Durable et de l’Energie, show that the number of new build property sales in France fell nearly 25% in the third quarter of 2012.

There was also a fall of 21% in the number of house building starts and a 6.9% fall in building permits for the same quarter.

Industry association, the Fédération des Promoteurs Immobiliers, reported a fall of 30% in sales of new homes from its members.