Reports in today's French newspaper Le Figaro and Britain's Daily Telegraph reveal a mix of opinions about the state of the French and British property markets, and when prices - as well as interest rates - are likely to rise or fall, and how this might influence ones decision to buy.
According to one expert from the French firm Global Equities, property prices are likely to fall by another 10% between now and the end of 2010 or early 2011, before starting to rise again. The same spokesman notes however the sales of new-build properties are holding up but progress here as in other markets will depend largely on interest rates.
An economist from Xerfi is also positive about new-build sales, which have been boosted by investors taken advantage of the French government's latest tax incentives (loi Scellier) and seeking a relatively safe haven for their funds. Prices of older properties however were likely to decline by 10.5 this year and a further 5% in 2010 before stabilising in 2011 and starting to rise again in 2012.
According to a spokesman from HSBC prices need to have declined by as much as 25%, since the start of the econolic crisis, to reflect their true value against French consumers' reduced spending power, which has been declining since 2003. The same spokesman confirmed that the market for new-builds is stronger as investors have come onto the market in the last few months, having deferred spending until now.
Interest rates are the key factor, according to the spokesman from Emprunt Direct, who points out that it is currently possibly to borrow at 3.60 - 3.70% over 10 years, and at under 4% over 25 years. These rates are likely to hold till the end of the year before rising again in 2010. Low interest rates and reducing property prices - now at an end, according to this source - should help encourage first-time buyers enter the property market in the coming months.
For a view of the British market, according to the Building Societies Association, 58% of consumers feel that now is a good time to buy, compared with only 34% in September 2008. However, job (in)security, the prospect of finding a larger deposit and worries about keeping up mortgage repayments continue to be cited by the majority of would-be buyers as the principal deterrents to home buying. However buyers are more confident they will find a mortgage than they were a few months ago.
Whether buying or selling a French property, which is often linked to the sale of a property in Britain, the picture is far from clear. As resported elsewhere on this site, sales are down by about one-third overall in France, but some 500,000 transactions are nonetheless expected during 2009 according to Notaires de France. Price variations vary from region to region, and even within the same town or street, with some properties holding their value and others not. While some properties remain resolutely overpriced by their owners, despite the advice of estate agents.
As always, a decision to buy or sell depends very much on personal circumstances, and it remains the case that sensibly priced properties in good condition will always find a ready market. Careful research is recommended.