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The average price per square meter of residential property in France fell by 1.8% in 2013 and this year the prospect of rising interest rates could hit the real estate market further.

Figures show that year on year prices fell in some regions and increased in others but overall the firms says that record low interest rates supported prices and sales.

This follows a fall of 1.9% in 2012 and means that prices are around the same as they were in 2010, according to Century 21. Another leading chain, Guy Hoquet, said average prices per square meter fell 1.6% nationally in 2013.

Figures show that the steepest fall in prices was in Pays de la Loire with a fall of 7.8%, followed closely by Franche-Comte with a fall of 7.7% and then by Lower Normandy where prices were down 6.4% year on year. In neighbouring Upper Normandy they fell 5.8%.

Prices fell 3.8% in Brittany, Centre, and Provence-Alpes-Cote d’Azur. In Bourgogne prices were down 4.3%, in Midi Pyrenees 3% and in Champagne-Ardenne and Poitou Charente there was a fall of 2.7%.

A number of regions saw smaller falls including Languedoc Roussillon down 2%, Lorraine down 1.2%, and Nord-Picardie down 0.4%.

Limousin led the price rise with a positive 7.6% but the region has some of the lowest prices in France, while Aquitaine saw a rise of 5.1%. Elsewhere the prices rises were more modest, up 0.5% in Alsace and the Auvergne and a rise of 0.3% in Rhone-Alps.
 
Ile de France and Paris largely saw prices fall in 2013. The data shows prices were down 3.9% in Paris and 2.9% in Ile de France. In surrounding departments prices also fell, down 6.5% in Seine et Marne, 5% in Hauts de Seine, 3.5% in Seine Saint Denis, 4,4% in Val d’Oise, 0.6% in Essonne and 0.4% in Val de Marne. Only Yvelines saw prices rise, up 2%.

The overall national fall of 1.8% is less than expected, according to estate agents. Elix Rizkallah president of LaForet, the third largest chain of agents in France, had thought prices per square meter might have fallen by up to 5%. But he also pointed out that in some rural areas the actual fall in prices is probably much bigger than averages suggest, with some locations experiencing price falls of up to 15%. He added that outside of Paris sales of properties worth €400,000 or more are rare.

It's been said that the national average price fall is far less than expected considering the gap between prices and household income and this is due to the low interest rates. The proportion of financing for home sales increased from 76.6% in 2012 to 79% in 2013, the firm’s data also shows.

According to experts it is not just the rates this year but a long term steady rise that will hit the property market. ‘The unknown is the magnitude of the rate increase in 20 years. If it rises from 3% to 4% prices will fall by 5% to 10%’.

He believes that in the short term the market is affected by sellers refusing to bring down their asking prices meaning that sales are limited to those who need to move and other potential sellers are not bothering at present.

However sales have not suffered. Century 21 reports a 3% rise in transactions in 2013 compared with a 12% fall in 2012. Guy Hoquet saw sales increase by 4% and at LaForet there was a 5.5% rise. These figures indicate that sales have been much better than expected at Notaires had predicted a fall in sales of 2.8%.

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The recent clarification of capital gains rules is tempting high net worth individuals back into the French property market, according to a leading French property agent.

They explain that when President Hollande came to power he toyed with the idea of ending tax breaks for the wealthy and of introducing a marked increase in CGT, contributing to a further decline in an already slow market.

However, two recent developments have calmed the fears of wealthy buyers. Firstly, reduction in the period for complete exoneration from the CGT from 30 years to 22 years since September 1st 2013.

Secondly in order 'to aid the fluidity of the property market' a tax allowance of 25% has been introduced for one year only for sales between September 1st 2013 and August 31st 2014.

Many companies selling French property have reported great increases in search traffic with regard to French property.

In addition to this increased demand I saw that the highly respected research team at Savills told the Wall Street Journal that new European lenders are coming into France at the rate of one a week. This led the newspaper to report that “France is one of a select few countries where lenders are daring to tread once again“.

Mortgage rates are at historical lows, starting at 2.10% for a loan up to 80% of the purchase price and wealthy international buyers can sense that there are some excellent deals to be had.

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Source: France Property News

A recent survey from James Yerkess, Head of Foreign Exchange at HSBC, suggests that the number of British baby boomers who are considering the purchase of an overseas property is at its highest level since the financial crisis began over six years ago. The report concludes that...  “The economic downturn has had an impact on the income and savings of many but it has also helped lower the price of property in numerous overseas locations. Many of the baby-boom generation, who are now approaching retirement, are fortunate enough to remain relatively asset-rich despite recent economic frailties and this has opened up opportunities for taking advantage of these lower property prices abroad.”

The report further points out that 10% have a definite plan to buy a home abroad, while 38% would seriously consider doing so – up from 30% before the financial crisis hit home. Their chances of a successful outcome have been vastly improved by current low interest rates across Europe. Perhaps unsurprisingly, France is one of the countries proving to be most popular among those looking to enter the overseas market. Figures showed that 16% of the respondents to the HSBC survey revealed a desire to buy a property abroad and ideally that purchase would be across the Channel in the land of our Gallic neighbours.

Earlier this year, mortgage costs in France fell to record levels so that British borrowers are able to access rates that are even more advantageous than those available in the UK. These low rates were sparked off by fierce competition between French lenders trying to attract domestic buyers back into the market.

According to the French National Federation of Estate Agents (FNAIM), the total number of property transactions carried out in France last year was around 19% down on properties sold in 2011. This has caused the banks and other independent lenders to drive mortgage rates down, which some experts suggest has led to mortgage rates about 0.25% lower than the level seen at the end of World War II. The result is a situation where non-residents are able to access a 20-year fixed rate mortgage at 3.35% and 20-year tracker mortgages from just 2%. Furthermore, not only are the mortgage rates low but FNAIM figures showed that house prices nationwide grew by only 0.8% in 2012, compared to nearer 1.5% in 2011. This year the Federation forecast of a national 2% decrease in values is generally thought to be spot on. Finally, amended Capital Gains Tax rules will provide a welcome relief for second home owners in France and from September 2013, a one-year special temporary tax reduction of 25% has been available.

There is much to attract British overseas property seekers to France   right now...........................................

VIVE LA FRANCE!  

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Some good news for property owners in France or property hunters thinking of taking advantage of very low borrowing rates available right now. A survey conducted asked owners who goes to France for holidays and when - and how the market is holding up in terms of letting weeks per year. Their response revealed reassuring stability in the length of the French holiday season over the last three years.

Around 30 per cent of owners who responded said that they let for 20 to 30 weeks of the year and 15 per cent report 30 to 40 weeks of lettings. So the majority of respondents attract visitors during the peak summer period and into the spring and autumn ‘shoulder’ times, making a season from five to ten months’ duration. Some of these include the Christmas and New Year peak with lulls on either side.

Some owners were new to letting and one reported a 100 per cent increase, but overall the response shows that the majority have seen no change in the length of the season and those who were either up or down were about even in number.

As for type of visitors, the majority of owners said they host families during the peak summer season and couples or groups outside the summer months of July and August. Some of the couples are older, whilst others are younger parents with a baby.

There has been a perception that older people go to France, but the survey revealed that the vast majority of visitors are in the 30 to 50 age group, followed by the over 50s. They also reported a significant number of under 30s – and of course many host visitors across all ages.

How many visitors to France are first-timers and how many are dedicated Francophiles? The most common response to the first question was ‘very few’. The market mainly hosts lovers of France from the UK who return many times, even if they often try a new area – an indication perhaps of the great variety of regions to experience.

But what level of repeat bookings do owners receive for their individual property?

A third receive up to 15 per cent repeat bookings and a further third between 15 – 25 per cent. So Francophiles are loyal visitors, although a few owners said that earlier bookings are increasingly pipping would-be repeaters to the post and preventing them from securing their favoured weeks.

A typical example is Le Moulin, a large former watermill with swimming pool near Issel in the Aude region of Languedoc Roussillon owned by Brian and Angela Stephens.

In summer they host families and weeks sell out fast, whilst in autumn visitors are usually mature groups of friends or parents with adult children who come to explore the chateaux and abbeys.

"Owners clearly need to be flexible, making their accommodation practical for families during the school holidays but also comfortable for couples and older people."

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Source: A Place In The Sun

The departments on the Cote d'Azur will always outshine other areas of France, but some other departments are not far behind.

The table below shows the number of sunshine hours in the top twenty sunniest departments of France in 2012, the latest period for which comprehensive information is available.

The Cote d'Azur takes the top five places, followed by departments in the regions of Languedoc-Roussillon, Midi-Pyrénées and Rhône-Alpes.

Sunniest department is the Bouches-du-Rhône, which is a consistent performer at the top of the table.

In comparison with 2011 out of the 2012 list goes Haute-Loire (Auvergne), Corrèze (Limousin), Lot (Midi-Pyrénées) who are replaced by Charente Maritime (Poitou-Charente), Charente (Poitou-Charente) and Haute-Garonne (Midi-Pyrénées).

Many French departments are large, with different climate zones within them, so the table should be used only as a general guide.

Source: Météo France

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1

Bouches-du-Rhône (Provence-Alpes-Côte d'Azur)

3,009

2

Var (Provence-Alpes-Côte d'Azur)

2,927

3

Alpes-Maritimes (Provence-Alpes-Côte d'Azur)

2,915

4

Vaucluse (Provence-Alpes-Côte d'Azur)

2,897

5

Alpes-de-Haute-Provence (Provence-Alpes-Côte d'Azur)

2,880

6

Gard (Languedoc-Roussillon)

2,804

7

Hautes-Alpes (Provence-Alpes-Côte d'Azur)

2,734

8

Hérault (Languedoc-Roussillon)

2,683

9

Pyrénées-Orientales (Languedoc-Roussillon)

2,608

10

Ardèche (Rhône-Alpes)

2,454

11

Drôme (Rhône-Alpes)

2,450

12

Aude (Languedoc-Roussillon)

2,365

13

Lozère (Languedoc-Roussillon)

2,360

14

Aveyron (Midi-Pyrénées)

2,249

15

Tarn (Midi-Pyrénées)

2,233

16

Charente-Maritime (Poitou-Charente)

2,182

17

Tarn-et-Garonne (Midi-Pyrénées)

2,161

18

Cantal (Auvergne)

2,160

19

Charente (Poitou-Charente)

2,141

20

Haute-Garonne (Midi-Pyrénées)

2,124