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You may recall, if you read Parler Paris Nouvellettre®, that I spent most of last week in the "City of Art and History," a.k.a. Port de la Lune (Port of the Moon), a.k.a. Bordeaux. I was there tape our 33rd House Hunters International episode with two Americans who found it as the city they felt they could call home.
Sometimes called "Le Petit Paris," Bordeaux is home to a huge wine industry and boasts of the longest pedestrian shopping street in Europe – rue Saint-Catherine (1.2 km). The architecture of Bordeaux is stately and elegant, much like Paris, but still different in style. There's no mistaking Bordeaux from Paris and would argue this nickname dilutes its uniqueness.
The city is one of France's most beautiful, with the exception of one square of disastrous contemporary architecture in the Mériadeck district, which has been called "weird, but graphic, like an '80s jogging pant," "ugly," "a gigantic platform for pedestrians," and one article I read commented "You like it or you hate it." I can't imagine liking it for any reason. It's desolate and seemingly dangerous, but one thing for sure, it's unpleasant for humans.
None of the apartments we visited with the House Hunters International contributors were anywhere near there. All were in beautiful old buildings located in different parts of the city:
1. Quai Des Marques, on the river near the Cité du Vin 2. Rue Esprit des Lois, Quai du Maréchal Lyautey, steps from Place de la Comédie (Opera House) 3. Jardin Public, the Chartrons district
It was a perfect way for me to get to see and know the city better, not having spent much time there at all, and to learn more about the city's real estate market. One thing I learned is that Bordeaux is "hot" – property rose 16% over one year with a median price per square meter of €3,930. Why are we not surprised?
At the end of February 2018, the annual volume of transactions fell slightly: 965,000 transactions were completed over a twelve month period (as against 969,000 at the end of January 2018) for a 10.9% increase year on year. The annual volume of transactions thus developed at a slightly slower pace and two factors may suggest stabilization over the coming months: the accumulated low of new loans for households year-on-year continued to drop; 42% of banks reported a fall in home loan applications.
The reasons for the higher transaction volumes since the start of 2015 are known: low interest rates, longer loan terms, targeted tax incentives, overall reasonable prices in the French provinces, and a larger stock of transferable properties. Notaries are now seeing a soft landing, suggesting more reasonable volumes for 2018, as the catch-up effect is no doubt felt.
Older properties: Prices still on an upward trend
Year on year, prices continued to rise: +3.4% in the fourth quarter of 2017 compared with the fourth quarter of 2016, after +3.3% in the third quarter of 2017. This rise was particularly noticeable in older apartments (+4.5%) where the trend remained better than in houses (+2.6%). Nevertheless, over a quarter, prices of second-hand properties stabilized: +0.5% in the fourth quarter of 2017 (provisional seasonally adjusted figures), after +0.9% in the third quarter of 2017. As has been observed since the end of 2016, the upturn was greater in apartments (+0.7%) than in houses (+0.3%).
This growth was more marked in Greater Paris, with a 5.1% increase in the sale prices of second-hand properties year on year in the fourth quarter of 2017 (after +4.6% in the third quarter of 2017 and +3.9% in the second quarter of 2017). Between the fourth quarters of 2016 and 2017, the price of older apartments rose 8.6% in Paris (where all the districts increased), by 5.2% in Hauts-de-Seine and some 4% in Val-de-Marne and Seine-Saint-Denis.
In the French provinces, prices of older properties rose year on year less significantly than in Greater Paris, +2.7%, between the fourth quarters of 2016 and 2017. As in Greater Paris, the increase was greater in apartments (+3.3%) than in houses (+2.4%). However, these prices stabilized between the third and fourth quarters of 2017 (+0.3%).
In terms of the major cities in the French provinces, for older apartments, prices were stable or on an upward trend in the fourth quarter of 2017. The only exception was Saint-Étienne, which posted a 4% fall in prices over the year. In Grenoble, Dijon, Nice, Montpellier, and Tours, prices were relatively stable. Bordeaux still hovered at the top, with a 16% rise year on year and a median price per sq. m. of €3,930. In Nantes, Annecy, Lyon, Lille, and Toulouse, the median price also rose significantly, between 5% and 8%. In the other major cities, the increase was more moderate, between 2% and 5%. In the major urban centers of the French Provinces, prices of older houses were rising. The sharpest increases came from Valenciennes (+9.8%), Nancy (+9.9%), Nantes (+11.1%), Saint-Nazaire (+12.3%), and Bordeaux (+14.1%). In Lyon and Marseille, prices were almost stable year on year. Thus, while prices increased in the other major urban centers, Nice stood out, as in the previous quarter, with prices on decline (-3.6% year on year).
Thus, in areas where prices rose sharply, i.e. where demand outstripped supply, it was vendors who benefted from bank interest rates which, throughout 2017, remained at still low levels.
Older properties: price index forecast
The price index forecast for the end of May 2018, based on pre-contracts throughout mainland France, expects prices will continue to rise in the case of older apartments (+4% year on year) or older houses (+2.2%).
In Paris, early indicators on pre-contract predict that the upward trend is likely to continue at least until April 2018, when the price per sq. m. is expected to reach in the region of €9,300, a 9% rise over approximately one year. In the French provinces, the index forecast for pre-contracts follows an upward trend, though price rises will subside. At the end of April 2018, year-on-year trends are +2.3% for older apartments and 1.9% for older houses.
Overall, notaries saw a downturn in transaction volumes at the very start of 2018, with prices remaining steady.
Credit - Banque de France data (February 2018)
Mortgages outstanding continued to rise (5.8% year on year) and borrowing rates remained low (1.61% on average). The proportion of new renegotiated loans rose slightly to 20% in February 2018, though it remained low compared with one year ago (60% in February 2017).
French new housing market
Cancellations were still very high, up 31.9% compared with the fourth quarter of 2016, and affected almost 3,800 units, an equivalent of 10.9% of reservations.
P.S. To all my friends of Parler Paris and French Property Insider, I make Le Matisse, my Nice abode, available for short to medium stays while I'm not using it. Those who have already stayed here have found it as delightful as I do. If you're interested in getting to know Nice, Le Matisse is your answer. Email [email protected] for more information and to verify availability.
North American Expat Financial Forum
Hosted by Dunhill Financial and the Adrian Leeds Group Sponsored by Moneycorp Currency Specialists and Caye International Bank
Wednesday, May 30, 2018 4 to 8 p.m. Chez Jenny, Paris, France
Seven international speakers are coming together for this very special event in Paris, France!
FREE EVENT!* PLUS, STAY FOR DINNER WITH US AT CHEZ JENNY (€45/Person)! DEADLINE TO RESERVE: MAY 25, 2018!
To reserve your place at the forum and for dinner at Chez Jenny, click here.
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