Even though the likes of France have historically been very popular with European property investors there is some uncertainty as we head into 2017. The UK has confirmed plans to exit the European Union and there are concerns that French elections in 2017 could possibly lead down a similar pattern. So, what does 2017 hold for the French property market?
The French economy is forecast to post growth of 1.3% for 2016 and a similar rate of growth in 2017. This is expected to accelerate slightly in 2018, with forecast growth of 1.4%, and 1.5% in 2019. The problem is that in order to support the French government’s deficit reduction program there is a requirement, at this moment in time, for slightly higher growth over the next three years. So, what does this mean for the French property market in the short to medium term?
French property market
Against the backdrop of a challenging political environment, disappointing economic growth and further trouble in the European Union, it is interesting to see French residential property sales up 15% in 2016. This is the highest rate of growth since 2008 with many experts now predicting that French property prices have “bottomed out”. Property price growth across France in 2016 is expected to hit around 0.5%, far less than the likes of the UK, but next year the situation should improve with growth of between 2% and 3%.
One issue which many overseas investors may not be aware of is the fact that the French property market is extremely varied as are performance figures. Even though the general increase in property prices is expected to come in at around 0.5% for 2016, places such as Bordeaux, Nantes and Toulouse have posted increases of up to 6%. So, if you are investing in the French property market you will need to be selective with regards to your investments in terms of location and property type.
As a leading light in the European property market France attracts more than its fair share of overseas investors with British investors historically very important. During the first half of 2016 demand for French property from UK investors was relatively strong although this fell by 19% after the Brexit vote. However, the general consensus in the French property market seems to be that UK investors will return in 2017.
Even though the French general elections in 2017, which will be a close fun affair, might impact the timing of some investments there is increasing demand from America, Australia and Scandinavia. After a relatively difficult period since the 2008 worldwide economic downturn there is a growing consensus that French property has now bottomed out and offers good value in the longer term. The currency fluctuations of late will impact the strategies of some UK investors but even taking this into account it does seem as though the trend has turned and French property is now back in vogue.
As with so many other countries across Europe, the political and economic outlook for France in 2017 is difficult to say the least. You would be forgiven for assuming that this uncertainty could paralyse some European property markets such as France but that does not appear to be the case. Domestic and overseas investment demand for French property is growing amid signs that property prices have bottomed out and there is good value to be found in the medium to longer term. However, as we touched on above, you will need to be selective with regards to your property investments across France because markets are so varied as is performance.