The Prospects for the French Property Market in 2013

What are the prospects for the property market in 2013? Here’s what the Notaires of France predict…

Sales volumes in the past for France have amounted to about 800,000 annual sales, but 2012 is likely to report between 650,000 and 700,000, showing a clear drop in the market. There is a risk that 2013 sales volumes will drop below the 650,000 mark.

In 2013, three additional factors will contribute to a further decline in the number of transactions:

– The economic outlook, with growth continuing low causing the inevitable rise in unemployment, – Potential buyers waiting for the market to drop further, – And the absence of any state support for potential buyers with the exception of particularly sensitive urban areas.

Under these conditions, the Chambre de Notaires is predicting that sales volume will not reach 600,000, and might not even exceed 550,000 transactions in 2013. The number of properties sold will be even lower if sellers do not lower prices or if they choose to defer the sale of their property (a result of recent capital gains tax law reforms). A further loss of tax revenue for counties and municipalities is to be feared if sales volumes are reduced. The decrease should generally be on a smaller scale than in 2012 but the number of communities that suffer both a decline in sales volumes and prices could be higher in 2013.

The scenario of a rapid decline of prices and sales volumes occurred in 2009, but this was an exception. Instead, the rule is that the lower prices are not only relative to the sales volume, but also the drops extend over a period of several years. This is what happened in the 1990s. It is also based on facts established by the OECD from observing dozens of real estate cycles in all of their member countries: prices (in real terms) had increased by an average of 40% during six years before a fall 26% for the next 5.5 years.

What are the prospects of development of the real estate market in the news for 2013?

The volume of sales of real estate developers for the entire year of 2012 should be closer to between 70,000 than 75,000 units sold.

Real estate developers sales volume for the whole of the year 2012, should be closer to 70,000 to 75,000 goods sold.

The effect of the end to the tax scheme Scellier has been postponed to the end March 2013, but this does not have a large effect on the  market.

The prospects for new housing in 2013 have no reason to be brighter than those of the past. Prices on new properties on the  market will suffer the economic strife of 2012. Add to that the increased sale of social housing that could skew the value of property. More social housing is supported by the government particularly in major urban centers where property is at a premium, bringing values down. The market is also handicapped by economic and real estate conditions as  described above. Sales to investors are predicted to be less than that of 2012. With
the attraction of the new tax system “Duflot” (the new incentive for investing in new-build, energy efficient property) the outlook remains difficult to anticipate.

In essence, we can expect sales to be down and the price of property vulnerable. One should consider purchasing in a down market!…so perhaps the next couple of years will prove to be a great time to get your proverbial toe in the French real estate market.

A bientôt,

Adrian Leeds
Editor, French Property Insider & Director of The Adrian Leeds Group, LLC

Email: [email protected] 

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