Is the French property market dying a slow painful death? Or is it so fragmented that there are still opportunities for the brave? This thread was originally posted back in September 2007 but just recently it has been revived with much discussion about the state of the French property market. There are a few very interesting points being made, not least the fact that more prominent areas such as Paris seem to have a different property environment and direction than those properties located in the smaller cities, towns and countryside.
Much is being made of the current economic meltdown in the US and the fact that the mortgage giants Fannie Mae and Freddie Mac are on the verge of going under in the US – companies which between them hold about half of the US total mortgage market. The feeling is that problems in the US are already impacting on property markets worldwide and things look set to get worse before they get better.
There is also a very useful recap of the French property boom for the period 2000-07, a time when many people enjoyed great gains and it was seemed easy to make money in the property market. However price movements in 2008 appear to vary widely across the country but on the whole French property prices are down between 10% and 30%, something which many forum members expect to get much worse in the coming months. The main concern of many is the stagnation of the market and the fact that buyers have disappeared and nobody is sure when they will return.
Those who follow France closely will be aware that the country is the most popular tourist attraction in Europe attracting literally millions of visitors a year. As tourism and accessibility are two main factors of any property market, France scores very highly on both of these points and these are two good reasons why French property has done so well over the last six or seven years.
However, with worldwide economy under great pressure there has been an inevitable reduction in tourist numbers (something which will get worse before it gets better) and money is becoming tighter across Europe and the world. The English holiday home market is also suffering with less Brits looking to France for a second home, partly because of funding issues, the market and also an array of property scams which have made investors very cautious.
While the French property market has some similarities with the UK market, in that Paris and London have their own property environments very different from those smaller cities, towns and villages, Paris seems to have held up a little better than London at the moment. However, with property buyers now affectively on strike, massive discounts available for the brave, the short term outlook is not good for the overall French property market.
One forum member mentioned the need for ‘capitulation’ in the property market before the long term growth pattern can be resumed. This is a very interesting observation and one which is common place in the stock markets of the world in times of trouble.