Real Estate

03 March 2015

Britons to the rescue 

Last year, economists Jean-Luc Buchalet and Christophe Prat predicted a decade of decline for the French housing market as a result of weak income growth. Although falling house prices in 2014, especially in rural areas, seemed to confirm this trend, the weak euro and foreign buyers may come to the rescue.

According to estate agency Leggett Immobilier, transactions involving Britons – the largest non-domestic buyers of French property – are up 43% over the past 12 months, while the average price has risen from €269,000 in 2013 to €300,000 last year.

Loose monetary policy in the eurozone, the end of Switzerland’s currency peg and concern about deflation have all helped to drive the euro lower – around 18% against the dollar and 13% against sterling over the past 12 months.

Certain areas are benefitting more than others. Last year, the hot spots were Bordeaux and coastal towns such as Biarritz and Hossegor, but inland areas such as Dordogne and Lot-et-Garonne were weak.

In the future, southern France may also benefit, especially with a new high-speed train from the UK planned for launch in May to Avignon and Marseille, which should boost interest in destinations throughout Provence. Property in the Alps is also likely to benefit, Leggett believes.

Buchalet and Prat argue that the domestic housing market will continue to be held back by factors including tougher credit conditions, a reduction in tax incentives and ageing of the population, but foreign buyers unaffected by these issues could take up at least some of the slack.