Wednesday, February 18, 2015

French property prices - again!

Endless discussion once again on one of the property forums dedicated to living, working and buying/selling property in France, where I have tried once again to explain the possibilities of making a profit - or not. No two cases are ever the same.

Anyone who bought a French property before 2002 probably enjoyed the benefits of ridiculously low prices - two room apartments on the Mediterranean could be bought for the French equialent of £20 000.......This was before the changeover to the Euro which resulted in price inflation, in much the same way as decimalisation did many years earlier in Britain.

I bought a beachside property just before 2002 and some four years later was approached by my next door neighbour who wanted to create two extra bedrooms and buy my apartment. By this time, apartments such as mine were costing three to four times what I had paid, and as I explained to my neighbour - who knew what I had paid for it - I would have to sell it at a price that would enable me to buy a 'replacement' at the new, higher prices. He accepted this argument, as he wanted to stay in the building, and extending his existing apartment was a cheaper option than moving, as he too had bought his present apartment even earlier than me at the then extremely low prices.

The 'profit' I made enabled me to move to a similar but more modern apartment along the beach, in a complex facing a yacht marina. I stayed there for some six years but as the crisis hit the European economy I gradually got fed up with the long winter months (and short noisy high season) and put the property on the market - where it stayed for two years! Eventually my agent found a buyer, a yacht owner who had managed to capture one of the extremely rare berths available (there is a waiting list). I eventually sold for a modest profit and by opting to move to the nearest town - with cheaper average prices - found an atypical property which I like.

Analysing my sale, one has to bear in mind that I sold a property in a 'sought after' area which attracts relativeley wealthy buyers (boat owners) and moved to an 'atypical' apartment (sometimes not easy to sell) - city centre, no parking, third floor, no lift. The owner had had to move for work to another town and the property had been on the market for some 18 months - but he too made a ' profit' by selling to me at 30% more than he paid for it (as I discovered going through the documents provided before I signed the purchase contract).

What I hope these two examples show is that 'normally' you can expecte to at least recover your purchase costs (including transaction fees and taxes) and even in a slow market earn enough 'profit' to enable you to buy a similar type of property - or theoretically, trade down by leaving a smart area for one less popular. I was also fortunate in that both my buyers and my seller wanted to move, and their choices were motivate by special needs - to extend their existing apartment, to live close to their boat, as a result of a change of job. I was in a sense lucky that my own circumstances coincided with theirs - which perhaps confirms the much used adage that your property is only worth what someone is willing to pay for it!