The Price of Property in Nice, Electricity in France and Borrowing Money is on the Rise

NICE IS NICER THAN EVER: PROPERTY PRICES SOAR IN ONE YEAR

Source: Nice Presse March 13, 2023

As prestigious as ever, the city of La Maralpine in the Parc Naturel Régional des Préalpes d’Azur has seen its prices rise over the last twelve months, according to a new barometer.

All the buyers know it, at the moment, to obtain credit is a real hassle. The costs have increased, while the purchasing power of the buyers has lead in its wings.

For the magazine “Capital,” the National Federation of Real Estate (Fnaim), has estimated property prices as of March 1st, 2023 in 37 of the largest cities, in a study unveiled March 13th. Some communes popular with buyers have seen prices erode: this is the case of Paris (-2.2%), Lyon (-1.6%) and Nantes (-0.4%). In the capital of the Alpes-Maritimes, the average price per square meter reached 5,029€, according to the latest figures. Over one year, the increase reached 7.3%. There was also an increase in Strasbourg (4,091€, +9.4%) and Lille (3,947€, +7.4%), but things are a bit saner in Bordeaux (4,841€, +0.8%), and Rennes (4,099€, +1.6%).

It should also be noted that for the past year, the average time to acquire a property in Nice has been decreasing. Among the major French cities, Nice is in the category of profitable and low-risk real estate investments. Four sectors of the city stand out.

The capital of the Alpes-Maritimes has a real estate market that differs from other metropolises in France. The territory is not experiencing the price drop that is currently affecting the rest of France. On the contrary, prices tend to rise, which impacts the safety of the investment. In fact, it is rather advisable to acquire a property in Nice, especially if you wish to rent it, the demand being particularly strong in the area.

The Port is the most popular: According to our colleagues, four sectors stand out: the Port, with a purchase price ranging from 6,000€ to 10,000€ per square meter for a property in good condition. With renovation, count rather between 4,500 and 8,500€ per square meter.

A similar scale is found in the Carré d’Or. The yield is however 4%, which is less than in Valrose for example (5% on average). An average profit that is more or less similar to that hoped for is in Riquier, where the square meter is less expensive (4,000€ to 6,500€ for new builds).

The “arrondissement” of Hôtel des Postes/Wilson is also popular. To become a homeowner there, you will have to pay between 5,500€ and 8,500€ per square meter.

Valrose, Saint-Roch and Cessole in the race: Other neighborhoods may be potentially interesting, such as Saint-Roch or Cessole. The proximity of the Côte d’Azur University in Valrose is also an asset for potential investors.

It is worth noting that in Nice, renting out your property as a shared apartment can be a good solution for increasing your income, as can furnished apartments, which are more profitable. On the other hand, since new properties are currently relatively expensive, the expected return is logically lower (3.5%).

As a reminder, the seaside city sees its housing change hands very quickly, with an average of 61 days to conclude a deal. That’s not much—meaning “you snooze, you lose!”

YOUR ELECTRIC BILLS IN FRANCE

Since February 2022, the French Government has put in place a tariff shield to limit the increase in electricity prices. This rate shield is extended to 2023. Without this measure, your electricity bill would have doubled this year. Its application limits the price increase of your offer to 15% TTC on average and avoids an additional increase of 0.18€ TTC per kWh. This increase applies to March 13, 2023.

For example, a household that consumes between 4,000 and 6,000 kWh* per year, avoids an additional increase of between 720 and 1,080€ (including tax).

For more information on the tariff shield, visit this website.

In the context of the energy crisis, you have also been called upon to reduce your electricity consumption this winter, and according to RTE, the electricity transmission system operator, national consumption has fallen by more than 8%** compared to usual consumption.

*Source: range based on the average consumption of French residential customers (around 5,000 kWh/year, according to the CRE’s Observatory of retail markets for the 1st quarter of 2022).
**Evaluation over the period from 01/01/2023 to 29/01/2023.

THE CURRENT TRUTH ABOUT GETTING A MORTGAGE IN FRANCE

I canvassed my best mortgage brokers to learn which banks are lending to whom (or whom not) and why.

Only a very small selection of French banks are willing to lend to U.S. residents (this is thanks to FATCA, in case you didn’t already know). Some will lend up to 75% loan to value (LTV), although 70% is more the norm. Private banks will lend up to 80% if the borrower opens an account with 300,000€ and out of that, will insist that at least 100,000€ is invested into an investment portfolio.

The banks no longer want to deal with brokers. This has become a new problem for our clients because submitting applications to the banks directly is challenging. We were an introducer at one time, much like a broker, but that was before Orias accreditation was required by the French government. Created in 2007, its purpose is to approve insurance intermediaries, in accordance with Directive 2002/92/EC of the European Parliament2. We then had to give it up and work with licensed brokers.

Some of the banks will only accept applications from current clients. This is a new and added challenge.

One of our brokers says he has solutions for U.S. borrowers, but the maximum loan to value is 70% (fair enough), the minimum purchase price is 500,000€, the minimum mortgage is 300,000€ to 350,000€ for both principal or secondary residences. The banks principally seek salaried/employed applicants, but will consider self-employed applicants if their circumstances are not too complicated or convoluted (which means if their tax returns are easy to understand). This broker says the areas of France his banks are willing to lend on are: Paris, premium Alpine ski resorts, Cote d’Azur, and around Bordeaux. They can consider other areas of the country with budgets in excess of €750k, and all of it is on a case-by-case basis.

No matter what, if you have a strong net worth profile (assets vs liabilities), you can be considered for a loan. In other words, they will lend to you if you don’t need the money!

One last and big issue: the loans must end by the time the borrower is 75 years old. There is a life insurance policy mandated to secure the loan and because the premiums become so expensive over the age of 60, a borrower any older is less likely to be considered.

But “Ask Or You Shan’t Receive” is my motto! It never hurts to speak to one of our brokers if there is even the slightest chance! First, you must be our client, and then we will happily refer you to the broker(s) that makes the most sense for your particular property purchase.

A bientôt,