Strong price growth in Paris boosts France’s prime property market
A strong market in Paris has helped to lift France’s prime residential property market with prices in the city up 12% last year, the latest analysis insight report shows.
Overall, there has been a ‘remarkable’ reversal in France’s prime property market in the last two years which the analysis from international real estate firm Knight Frank suggests can be partly put down to the ‘Macron effect’.
It says that the election of Emmanuel Macron as President in May 2017 resulted in a ripple of optimism and regions such as the Cote d’Azur, Provence, the Alps and the South West of France have witnessed a strong turnaround in sentiment, buyer interest and transactions.
‘France celebrated a record in 2017 when over one million properties changed hands, and we expect transaction volumes to rise further,’ said Mark Harvey, head of European sales at Knight Frank.
He pointed out that historic low interest rates, rising house price inflation, growing economic and political stability means that France is looking to attract global wealth that will allow its real estate markets to thrive through 2018 and beyond.
‘We have seen a remarkable reversal in France’s prime residential markets stemming largely from a strong Paris market where prices increased by some 12% in 2017. Against a positive economic and political backdrop, France is now experiencing a buoyant and incredibly exciting residential market rebound,’ Harvey explained.
‘L’effet Macron, as witnessed since the summer of last year, has caused a ripple of optimism from Paris to the internationally sought after regions including the Côte d’Azur, Provence, the Alps and South West France, all of which have witnessed a strong turnaround in sentiment, buyer interest and transactional activity,’ he added.
The analysis suggest that international buyers continue to be the driving force of prime residential sales. British buyers have returned after a lull following the European Union referendum, now accounting for up to one in four prime residential purchases.
The remaining 75% of buyers typically stem from northern Europe such as Belgium, Denmark, the Netherlands, Switzerland and Scandinavia along with French domestic buyers who account for around one in five of buyers. Buyers from the Middle East, the US and even Asia are also displaying a greater appetite for French real estate.
The report explains that the popularity of different kinds of property depends a great deal on location. In Paris, traditional properties with grand proportions and period features are most in demand, while the preference in the south of France is typically for a local architectural vernacular with a more contemporary interior twist.
Budgets vary accordingly, albeit the majority of our buyers look between €2 and €5 million and seek elegant, turnkey ready accommodation with manageable gardens and ideally a breath taking view.
In contrast, in the Alps demand is frequently focused on new build properties, with off-plan developments representing 80% of the Alpine homes sold across Knight Frank’s network last year. ‘The advantages of buying off-plan in France are multiple and might include staggered payments, the most advanced construction techniques and materials, a 10 year guarantee, and a possible VAT rebate of up to 20% for those open to a rental solution,’ said Harvey.
Looking ahead, he expects sales to increase in 2018. ‘As global uncertainty prevails, France and its rich cultural tapestry remains an attractive and compelling investment and lifestyle choice,’ he concluded.