French property prices attract overseas buyers
A coincidence perhaps, but several UK broadsheets were looking at French property prices at the weekend. The general consensus is that prices are getting seriously cheaper, and so are loans (if you can get them in the credit crunch), and the Languedoc is singled out as the place to be…
Mon Dieu! Recent price falls for holiday homes in France mean the country is now offering rich pickings for British bargain-hunters.
France’s mainstream housing market has not witnessed the sharp downturn seen in the UK and many other countries, mainly because its mortgage lending practices have been far more restrictive. However, it is a different story when it comes to overseas buyers. Prices paid by foreigners boomed in recent years, creating a bubble that has now burst – allowing others to buy at rock-bottom prices.
- The Guardian
On the one hand, where are prices falling fastest? There are echoes of last month’s HSBC expat survey here, with the Guardian saying the biggest price falls have been in these bubble areas – “holiday home enclaves” – and:
A large number of expats and second-home owners are selling up, citing high living costs created by the strong euro as the main reason. Online property forums are littered with comments from struggling owners that falls of 25% to 30% have hit holiday homes in the Dordogne, known to many expats as Dordogneshire because of the proliferation of British residents. Ironically, many blame the high concentration of foreign-owned second homes for the severity of the drop.
- The Guardian
But forget the idea of that bargain-price gîte being a licence to print money. The holiday rental market is saturated.
The unnamed head of one major rental firm is quoted by the Guardian: “There have always been more gîtes than needed because they’re unregulated. Now the same applies to self-catering lets.”
Daisy Waugh’s woes
In the Sunday Times, though, Daisy Waugh focuses on the personal (as in her family’s personal gem, a farmhouse renovation near Bordeaux).
She deflates the more idyllic myths with a tale of bureaucracy and “endless round of unaffordable shopping trips, cooking chores and conversations about broken loos”.
Then in the London Independent, Chris Bishop from UK-based French property specialists Latitudes says Brits who already own property in France “seem keen to cash in on profits already made thanks to the performance of sterling.
“The euro has strengthened against the pound and this means that Britons who have bought in France have enjoyed an uplift, so quite a few are looking to cash in which ensures a steady supply of new instructions.”
Property in the Languedoc
"A Vendre" sign
Then they do the Languedoc vs Provence thing again.
“This area has a lot going for it: you are a short drive away from Mediterranean beaches, skiing in the Pyrenees, and the countryside is lovely. And the prices are appealing. We have a two-bed stone cottage available for just €83,000 (£71,000) in Languedoc, move this property to Provence and you would pay nearly double,” says Mr Bishop.
They also look at the credit situation:
“The key message is that French banks are still lending. You can even find mortgage loan to value of 100 per cent, not including stamp duty and other fees,” says Chris Ellis of Charles Hamer Financial Services, which specialises in the French mortgage market.
Long-term (10- or 20-year) fixed mortgages are the order of the day: “Rates of 4.9 per cent are available on 20-year deals. There are variable-rate deals but these have no guarantees so it can be difficult to budget mortgage repayments long term.”
As for likely trends, PR-inside.com is likely to have more spin than these newspapers, so bear this in mind when it says: “Analysts on the ground think prices will start to fall later this year, at which point the bargain hunters will start to find what they are looking for.”
Practical guide
Finally, yesterday’s edition of the Observer gives a good little checklist of what these overseas buyers should consider if they are thinking of a permanent move, such as:
- Currency swings
- Unexpected taxes
- Lost (UK) perks
- Homebuying costs
- Health cover
- Inheritance planning (and French law)
- Internet availability
- Changing luxuries
- Used car prices
- Remembering relatives (budgeting for flights to see them back in your old country)
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