Residential sales across France increased by 12.5 per cent in 2015 compared to the same period in 2014 according to the Notaires de France.
Mark Harvey, head of sales, France, Knight Frank says, "With favourable mortgage rates of around 2.3 per cent, prices stabilising in most prime markets and the euro weak against the pound and the US dollar, buyer confidence has strengthened."
Sales volumes are strongest within the €1m – €5m price bracket but transactions above €5m are slow. According to recent Knight Frank data, properties priced below €5m accounted for over 85 per cent of prime sales in 2015.
Mark Harvey continues, "The British are back. The British own more second homes in France (69,000) than in any other European country. Given the lifestyle on offer, France's proximity and the currency advantage in recent years, it is perhaps no surprise that the British are active once more and represent a key source of demand in all our markets."
Equipped with a strong dollar, American buyers are also increasing in number, particularly in Paris and parts of Gascony, whilst Evian continues to be in favour with high-net-worth-individuals from the Middle East, drawn to its lakeside living and easy access to the Alps.
Demand from domestic buyers has also strengthened. Faced with lower purchasing power abroad, a more positive political sentiment, cheap finance and good value – particularly in Paris – French buyers are active in their capital's market.
Across France, interest in income-generating assets, be it a vineyard, boutique hotel or olive grove, is on the rise and a trend to watch over the next few years. Wealthy buyers are increasingly seeking a product that generates an income allowing them to cover their costs, whilst also funding a month with family and friends each year in their favourite part of the world.
How does each region in France compare?
- Paris: Prime prices declined by 2.1 per cent in 12 months to December 2015. Americans, British and Brazilians are the most active international buyers in the market and 14.4 per cent of the housing market is categorised as second homes. Stock levels are relatively high.
- French Alps & Evian: Prime prices declined by 0.6 per cent in 2015. British, Swiss, Belgian and Middle Eastern buyers are most active in this region and 28.9 per cent of the property market is classed as a second home. Stock levels here are also relatively high.
- Côte d'Azur: The market has witnessed the largest fall in prime prices when compared to Knight Frank's other key second home regions. Prime prices here dropped by 2.8 per cent in 2015. British, Belgian and Swiss buyers are most active in the region with 17.8 per cent of the market owned as a second home. Stock levels are similar to those seen in the French Alps & Evian.
- Provence: Prime prices increased by 2.1 per cent in the year. British, Belgian and Swiss buyers again lead the way as top buyer nationalities. Around 19 per cent of the market here is owned as a second home. Stock levels are relatively low.
- South West France: Following significant price declines in 2015, prices in Gascony and the Dordgone have started to rise, albeit by 0.8 per cent. British, Dutch and American buyers are the most prominent foreign buyers here. Around 11 per cent of the housing market is calculated to equate to second homes. With stock levels relatively low this may put upward pressure on prices in the coming year.
Finally, what impact will the EU Referendum have on European second home markets?
Since the announcement by David Cameron that the EU Referendum will be held on 23 June - an event buyers and vendors have been expecting since 2013 – Knight Frank reports that it has been 'business as usual,' with no decline in enquiry numbers observed.
Mark Harvey says, "While the referendum will undoubtedly influence buyers' decisions when looking to purchase in Europe's key second home destinations, it will be one of several factors they will consider, including underlying market conditions.
"Across Italy, France and Spain, we are seeing prime prices stabilise and although the pound has weakened against the euro in recent days, it remains a long way off the GBP/EUR exchange rate of 1.02 seen in December 2008."
There may be implications for those who have retired abroad or are relocating for a long period in terms of pensions, healthcare and inheritance tax but in the absence of clear guidelines much of the finer detail remains pure guesswork. A shift to the EEA framework along the lines of either the Swiss or Norwegian model may in reality result in only limited changes.
The decision to hold the EU referendum in June rather than September is a positive step for both vendors and buyers ensuring that the market is subjected to only a short-lived period of uncertainty.
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