Is French property in a slump?
By Peter Mindenhall

Is French property in a slump?

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French property continues to be attractive to overseas investors but it could be entering a slump. Figures from the FNAIM, the organisation that represents estate agents, revealed that sales fell in 2012 across most regions. Across the board, real estate transactions dropped by 25 per cent, with Normandy and Brittany experiencing the most notable declines. These areas are traditionally popular with British buyers, suggesting the country is becoming less active in the market.

What's more, despite a 0.8 per cent rise in house prices, there are considerable regional variations. Prices increased in Ile de France by 1.5 per cent and Provence, the Cote d'Azur and Champagne Ardennes at 0.7 per cent respectively. Upper Normandy noted a 0.6 per cent rise in property prices, while homes in Langeudoc Roussillon, Rhone Alpes and France Comte increased in value by 0.5 per cent, 0.3 per cent and 0.1 per cent respectively.

However, significant falls were recorded in lower Normandy (5.7 per cent), Brittany (5.3 per cent), Poitou Charentes (4.4 per cent), Pays de la Loire (3.3 per cent), Midi Pyrenees (2.7 per cent), Centre (2.5 per cent), Lorraine (2.5 per cent), Limousin (2.2 per cent), Alsace (1.5 per cent), Bourgogne (1.1 per cent), Auvergne (0.5 per cent) and Aquitaine (0.2 per cent).

Michel Mouillard, economics professor at the University of Paris-X at Nanterre, explained to Property Wire that one of the main reasons behind these substantial price drops is the economic climate and a reluctance of sellers to bring down prices to the level buyers will pay. This creates a state of attrition until one side alters their position. Nonetheless, for domestic buyers to pick up the pace, financial stability and employment will need to be established in the country. Mr Mouillard stated: "We are in deteriorating economic climate. Only the very low bank interest rates have prevented the market from collapsing."

Slowing house price growth is not a new phenomenon either, with the Global Property Guide reporting in 2011 that values were softening. Figures from the National Institute for Statistical and Economic Studies revealed that prices only increased at 1.8 per cent when adjusted for inflation, which is just one percentage point higher than current growth levels.
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