French Property Insider Volume XII, Issue 33 Thursday, August 21, 2014 • Paris, France
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Moneycorp, World First and USForex
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Foreword: Sales are steady but prices are down in the Capital. Below is the latest report from the Chambre de Notaires. The question is why.
I am not an expert in economics by any stretch of the imagination, but I'd venture to say that the one-year 25% discount offered off capital gains taxes contributed to the increase in sales, which is what it was designed to accomplish. If sales continue to increase, now that the 'discount' is over (as of August 31st), then my guesswork would be unfounded. Still, prices are down as there is a lot of inventory on the market and this is good news for investors.
In the second article by currency specialist World First, the euro is looking weaker all the time and that's even better news for would-be investors who have other currencies to spend, such as the sterling and the dollars -- US, Canadian and Australian.
This, the soft market and along with low interest rates, this is a definitely good time to buy.
Sales are Steady but Prices are Down in the Capital
According to the latest data from the Chambre de Notaires, the Paris real estate market at the end of May 2014 has an annual decline in home prices reaching 2.1% in Ile-de-France, however, the number of sales of apartments and houses remained stable compared to the same period a year ago. In 2.5 years, the prices of existing homes fell nearly 5%.
On the whole in the Paris Region, price erosion has been more sensitive for homes (3.7% from May 2013 to May 2014, with a price to 290,600€) than for apartments (-1.3% in one year, with an average of 5,380€ per square meter). For apartments, the decline was more pronounced in the outer suburbs (-2.7% in a year and variations of up to 3.6% in the Seine-et-Marne) than Paris (-1.2%) and the "Petite Couronne" (-0.8%). From February to May 2014, the price of existing homes in the Ile-de-France was down 0.8%. This decline more affected the home market (-1.6%) than apartments (-0.3%).
In Paris, the average price per square meter of resale apartments stood unchanged since the last price reported at 8,130€ at the end of May 2014 (down 0.2% in three months and 1.2% in one year). Leading indicators of the Notaries of Paris-Ile-de-France based on the preliminary sales contracts for the coming months indicate a slight decline in prices in Paris. In contrast, a slight price increase should be recorded in the coming months for the apartments in the Hauts-de-Seine and the houses in the "Grande Couronne."
Throughout the Ile-de-France Region, 29,440 resale dwellings were sold from March to may 2014, a reduction of 1% compared with March to May 2013 (-1% over one year for apartments, staggered sales for homes).
The sales volume is stable compared to the same period a year ago. However, this stability masks significant disparities in the Hauts-de-Seine and Seine-et-Marne, where sales declined by 17% and 12% in a year. In the Val-d'Oise, they increased by 18% in one year.
Overall in the region, the number of sales of existing homes combined in the first five months of 2014 was 5% higher than recorded from January to May 2013.
Euro Continues on its Rocky Road, Encouraging Overseas Buyers to Take Advantage
By Simon Hilton, Senior Foreign Exchange Consultant at World First
Summer is always seen as something of a quiet time in business, with workplaces emptied of its staff for holidays and fewer people to do business with. Maybe you’ve taken the opportunity to have a well-deserved week or two off yourself. One thing that doesn’t rest is the currency markets, which have been whirring, as ever, at every second of every day.
And at the risk of sounding like a broken record, sterling is still performing strongly, as it has done all year long, a position which has been strengthened by the likes of data that has seen the UK economy finally creep above its 2008 GDP peak. Q2 GDP came in at 0.8%, matching Q1’s growth rate and backing up survey data from all sectors of the UK economy that the recovery is engendered, sustainable and flourishing. However, moving into Q3, we are expecting an eventual slowing of the growth seen in the past 12 months and for sterling to slip from its current highs, especially against the US dollar. On that note, GBPUSD has recently moved from 1.71 at the start of July to 1.68 at the time of writing. Despite that slight dip, sterling is still up year on year; GBPUSD was below 1.52 last August, so while £200,000 was worth $304,000 back then, it’s now worth around $32,000 more. Still, we’ll keep an eye on sterling for any further dips. Against the euro the pound has remained consistently strong.
As hinted upon just now, the dollar has started to fight back, not least because of a bumper payrolls number. 288,000 jobs were created in June, up from a revised 224,000 in May. April's initial reading has leapt from 192,000 as an initial figure to being revised to 304,000. The average job growth in the US through the past 3 months therefore is 272,000 - a huge number for an economy that supposedly shrank by an annualized rate of the 2.1% in the first 3 months of the year. We’ve seen how the dollar has clawed back some of the ground it lost to the pound, and it’s also up versus the euro. USDEUR is – at the time of writing – above 0.7450, when it was down below 0.7350 at the start of the month and languishing at close to 0.72 at the start of May. The difference between then and now is equivalent to €5,000 on a $200,000 transfer.
The slow decline of the European single currency continued in July against many major economies. Unfortunately for the euro, any decent European data was easily outweighed by poor numbers or horrific geopolitical events. For example the manufacturing and services sector surveys rose higher in July and will give hope to those who believe that the European economy is not in as dire a state as previously thought. However, as we stand at the moment, and thanks to a poor European inflation number once again in July, we can only see further slips in the value of the single currency.
The Australian dollar continues to perform strongly, with AUDEUR above 0.69, compared to sub-0.65 back in March – that’s a difference of over €8,000 on an AU$ 200,000 transfer. AUD remains steady against the pound.
Like many of the major world economies, the Canadian dollar is also doing well against the euro, with CADEUR up from close to 0.64 in March to 0.66 in May to above 0.68 now. When making a CAD 200,000 transfer, you’ll now get €136,000 compared to €128,000 in March. After gradual improvements against USD throughout the year, CAD has tumbled in the last two months. The big takeaway here for us is a continued rocky spell for the euro, which is weak compared to a number of major currencies, so for those making an overseas payment in the Eurozone – maybe you’re looking to buy a new home – you may be able to get more for your money.
P.S. It's today! Watch House Hunters International on August 21 at 12:30 p.m. E/P for "Every Little Girl's Dream Comes True in Paris". Katherine is a successful Hollywood screenwriter who wants to buy a home in Paris so she can explore her French heritage, inspire her daughter's future and show her aging father a glimpse of their family roots. Tune in to find out if she finds a pied-à-terre that embodies the charm of the City of Light!
Living and Investing in France Mini Conference -- Nice and the Côte d'Azur
Tuesday, September 16, 2014 6:30 p.m. to 9 p.m.
The Hotel Ellington, Nice, France
A special presentation and Q&A with property expert Adrian Leeds
Learn how to own a "pied-à-terre" of your own on the Riviera, in Paris or a home in the countryside that you can enjoy when you want...or profitably rent when you like...or just make a smart investment by owning property in France.
Plus ask all the questions you've ever wanted to ask of French property expert, Adrian Leeds, featured on HGTV's House Hunters International!