Off to a Great Start…Prices Still Rising!

French property market report – Sales Volumes Price Evolution of Adrian’s property (interactive map) Property prices around France French bank lending rates

Happy new year!

This is the first issue of French Property Insider for 2020, one of 50 issues per year since February 13, 2003. If you have friends who you think will enjoy getting information about French Property, don’t hesitate to forward this to them. The website link to subscribe is at adrianleeds.com/newsletter-subscriptions. You may unsubscribe at any time.

We start off the new year with good news from the Chambre de Notaires de France: the annual volume of transactions remains at a historical high, continues to rise, as do prices, lending rates continue to take a down-turn and confidence in the market is very strong.

While I was in Los Angeles last week, I met with six different clients, all potential investors in French real estate. With such statistics as what is published monthly by the chamber, I would not be doing my job if I were NOT to encourage investment in such a strong market like France. In the 25 years, I’ve lived and worked here, I’ve only experienced growth in the market with the exception of 2008 to 2009 when the financial crisis rendered the Paris market flat and saw some decreases in values in the French countryside. It recovered quickly and the rest is an uphill climb.

You may view an interactive chart of property prices here.

Put in any address to see how the prices have evolved up to the last five years. The chart here illustrates how my own property has seen an increase last year of almost 20 percent and over five years, almost 25 percent. Since purchasing it in 2000, it is currently valued at more than five times what I paid for it. The increase in value facilitated the “leveraging” of loans to purchase four other properties over the course of the last 15 years, three of which were for investment. Those properties generated enough rental income to pay for all five of the mortgages.

This is how investors profit from their real estate holdings. The sooner you invest, the faster you can start generating revenues and appreciation. This is what your new year resolution should be — to take this year to learn how to invest, make a profit and create security for your future.

Here is an excerpt from a recent article published on the Chambre de Notaires website:

French property: Analysis of the market

The analysis of the real estate market is derived from the French property marker report of notaires de France. It presents the real estate situation in France: trend and evolution of real estate prices.

With 985,000 transactions made over the twelve months to the end of March 2019, the annual volume of transactions remains at a historically high level, achieving a new record. Moreover, it has not stopped increasing year-on-year each month since the previous quarter (965,000 in December 2018) and is higher than the figure observed a year earlier (960,000) by 2.6 percent. At this rate, one million transactions could be achieved before the end of 2019.

Nevertheless, while still impressive, this number of transactions still needs to be put into perspective, as it is related to the available housing stock, which increases by around one percent per year. Therefore, the proportion of sales remain equivalent today to what it was in the early 2000s. As with the previous quarter, we are observing a stabilization of volumes in Greater Paris, after three years of growth. It will be necessary to observe volumes in the French provinces in the months to come to see whether they settle down as well.

This continuous movement is nevertheless based on the unflinching confidence of the French people in property; still considered a sure investment, where price increases are not putting people off buying. The overall debt of the French people is thus increasing, but the combination of low rates and the duration of loans is curbing the upturn in prices.

Slight falls in interest rates, which were already at a (very) low level since the start of 2019, are contributing to keeping the volume of sales and prices high. The average interest rate on new home loans (long-term and fixed-rate) decreased in April. Similarly, the duration of household borrowing is increasing, now at 19 years and two months on average. But it is common nowadays to resort to borrowing over 25 years. This policy of the central banks to keep the credit rates close to the level of inflation is making new first-time buyers more viable.*

* In France, the bank lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies. This page provides the latest reported value for – France Bank Lending Rate – plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus, and news. (France Bank Lending Rate – actual data, historical chart, and calendar of releases – was last updated on January of 2020. Source)
    
    Actual     Previous   Highest     Lowest   Dates             Unit Frequency     
   1.74        1.68           6.29         1.67        2003 – 2019     percent Monthly

The market, stimulated by the rates and the resilience and confidence in the French economy, despite the social tensions observed this winter, is currently running at full throttle. It is essential, however, to monitor the development of the ECB’s monetary policy, which could increase the rates again at the end of the year. This would raise the “property market fuel price” and would trigger stabilization of prices and, consequently, a settling down of the market. Nevertheless, although no huge upturn, it should still be dynamic, preserving the increased volumes.

A bientôt,

Adrian Leeds
Adrian Leeds Group

(As seen on House Hunters International)

P.S. If you haven’t seen it yet, watch our latest House Hunters International episode while you can on Youtube! (It won’t be there for long) “Going for Broke in Paris.” Watch it here now!!