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Around 2-3% property price decrease in France over 2013:

French property market has not recorded a significant drop price in 2013, however the market is still on a downward slope, therefore following the trend initiated in 2012, while market players continue to forecast another decrease for 2014.

The  actual 2013 price decrease might not be known before the French “notaires” have disclosed their official data (this will take quite some time). However, the preliminary data issued by various property professionals give a fairly good confidence of the property market trend in 2013. A 2-3% price decrease is in accordance with the forecasts analyses published on this website since the opening of our blog in August 2013.

Two leading real estate agents network (“Century 21” and “Laforet”) recorded a 2% price decrease in 2013 over the whole French territory, while a third ,“Guy Hoquet”, recorded -1.7%.  The biggest estate agents professional association “FNAIM”, assessed the price decrease at -2.9%. More specifically, flats decrease by 3.5%, while houses price eroded by 2.5% only. According to FNAIM, price decrease was slightly more pronounced in “province” (-3%) (=outside of Paris and its surrounding area “Ile de France”) than in “Paris & surrounding” (-2.5%).

Looking at the figure split by regions (for flats), the market varied quite significantly from a slight increase in the “Centre” region (+1.3%) to a significant negative adjustment in “Normandie” regions (-6.8%), while “PACA” (region from Marseille to Nice) also recorded a noticeable decrease by 5.9%(however it was only -2.2% and -3.8%, according to Laforet and Century 21). The “second home” market, which is almost at a standstill in most of French holidaymakers areas, might explain the price drag in PACA and Normandie, together with Creuse, Charente-Poitou, Perigord, and Languedoc-Roussilon….

However, more granular data disclosed by various property network professionals may vary significantly from one network to another. Therefore caution should prevail, especially when comparing property price trend for the main cities or more local areas. E.g.:  the flats price dropped by 10% in Marseille according to FNAIM, while the decrease remained more subdued according Century 21 (-5.3%) and Laforet; FNAIM disclosed a -5.7% price change in Lyon, while Century 21 data shows a relatively stable market. Unless there was a significant downward acceleration in Q4 2013, the last “notaires-INSEE” index disclosed for Q3 2013 (read our previous post “The French notaires disclose their property index“…), seems to be closer to Century 21 estimates than to FNAIM for Marseille and Lyon… Guy Hoquet network commented that although their statistics showed a -1.7% price change over France,   the network recorded -20% in certain localised rural areas.


Transactions volume in France remained very low in 2013, price may continue to decrease in 2014:

Leading estate agents network recorded at slight increase in sales volume in 2013 (+3 to 5%) while FNAIM recorded a decrease. A first estimation of number of sales in 2013 might be around 670 000-680 000 properties (source: FNAIM and Credit Foncier, excluding “new homes”), a 5% decrease compared to 2012 and the same transactions level as in 2008. The decline in volume is more significant in Ile de France (-6.6%, Paris and area around Paris). It is also significant in Provence-Alpes-Cote d’Azur, -6.7%, (region of Marseille, Aix, Toulon, Nice…) and in Normandie (nearly -7%) as the “second home” market is almost at a standstill. FNAIM declared that the current market environment makes it very difficult to disclose any forecast, due to economic uncertainties and lack of confidence among householders. This is leading many potential buyers to postpone their acquisitions.

Some estate agents noticed a small rebound of the share of first time buyers from 24% to 28% due to the very low interest rates over the year. However, this percentage is still very weak compared to an average year, thus explaining partly the drag down of transactions volume.

Century 21 commented that the time for selling a property tended to increase in 2013 (now around 90 days) as buyers become more sensitive to quality and property standards, they also shop around, and take their time to acquire a better property at a lower price…

At 650 000 transactions for 2014, FNAIM does not forecasts a volume recovery nor a significant drop, while the organisation estimates a possible further 3% price decrease over the whole French market. At the end of 2013 average property price in France stood at Euros 3,300/m2 for flat and Euros 2,100/m2 for houses.

Guy Hoquet estate network has planned for two different assumptions in 2014: a/ If the interest rates remain relatively stable, which should be the case at least for the next 6 months, price should vary between 0% and -2% over the year, b/while a significant interest rate increase would translate into a price drop by 5 to 7% or even 10%. However, the network did not disclose the exact interest rate hike that would generate such a drop. Laforet network forecasts a decrease by around 2%.

Guy Hoquet network disclosed its calculation in relation to the volume: an interest rate increase to 4% (for a 15 years mortgage) would see a drop in sales volume to 550 000 as 20% of potential customers would be unable to buy with this kind of rate increase.  Therefore, the current historically low mortgage rate would explain a sustained –albeit very low- volume around 670 000 units in 2013, which should remain in 2014 under the same interest rate environment.

The leading  mortgage provider “Credit Foncier de France” considers that the property market might be further impacted in 2015 by cut in government spending which might result in reduction of property tax incentive and mortgage incentive (e.g.: the state sponsored “zero” interest rate mortgage…) further weighting against a market recovery.

However, it is difficult to get a clear visibility of the market trend for this timeline horizon. Other macro factors might have changed in a year time.

Paris on a downward slope in 2013, likely to continue in 2014:

“MeilleursAgents.com” has recently published its December 2013 barometer, over viewing the property market changes in 2013. The website also comments on possible trend over 2014.

Property price decreased by 3.8% in Paris over 2013, and prices are down by 6.5% since the highest level in June 2011, so a decrease of Euros 500 /m2. In December 2013, average property price stood at Euros 8,094 m2 in Paris. Price changed by -3.9% in Paris, according to Century 21, while FNAIM recorded -3%. Laforet and Guy Hoquet network disclosed a smaller decrease at respectively -1.8% & -2%.

Most of the price decrease happened during the second semester 2013 concomitant with a slight increase in mortgage interest rates, while the price decrease was attenuated in the 1st semester by lowering interest rate giving additional purchasing power to the buyers.

Despite the price decrease price and very low interest rate over the year, the sales volume remained subdued in Paris and its surrounding area.


MeilleursAgents.com forecasts a possible price decrease in Paris by 3% to 5% over 2014:

The price decrease in 2013 was more pronounced for smaller flat (up to one bedroom) at -2.8% compared to larger flats (2 bedrooms and more) at -4.7%.

According to “MeilleursAgents.com”, there is on average 1.2 buyer for 1 seller inside Paris and less than 1 buyer for 1 seller in the suburb. This ratio should lead to further price decrease in 2014, as other factors should not evolve fundamentally (economic situation, interest rate, householders’ confidence…).

Prices in the near suburb changed more significantly in the more affluent “Hauts de Seine” by -4.7%, remained nearly stable in Val de Marne (-0.8%) and the less affluent Seine- Saint-Denis (+0.2%). In the outer suburb (“grande couronne”), property price changed notably by -5.4%.

Properties over Euros 500,000 are difficult to sell and their prices tend to decrease more. Thus, sellers accept a price adjustment more readily than the previous year. Buyers remain selective and cautious. However they seem to be more optimistic early in 2014 compared to end of 2013.  Low quality property can only be sold (with more selling delay) with significant rebates (in the order of 10%).

With 1.2 buyers for 1 seller (versus 7 for 1 seller in 2010!), Paris market is positioned for a further 3 to 5% decrease in 2014. The suburb is even a more favourable market for buyers with 0.6 to 0.9 buyers for 1 seller in the closer suburb and 0.5 to 0.7 in the outer suburb. This might lead to an additional 7% decrease in 2014.

A significant change in interest rate could change this outcome, however “MeilleursAgents.com” forecasts a stable interest rate in the first half of 2014 and a slight increase in the second half or 2014.

According to the network “Century 21” the Paris market is more favourable for second or third time buyers as property price decreased more for larger flats (in accordance with “MeilleursAgents.com”). Inversely, number of Investors and first time buyers decreased significantly. Investors might be worried about the new draft law “Alur” and property price still remaining high for smaller flats in Paris.


Change in price for flats in main locations during 2013 (Source: FNAIM)