Assetz® News - France still rising

France still rising

23rd April 2008 |

With so many property markets struggling with the credit crunch, various governments are battling away to try to restore some lost ground. In Britain this has come in the form of the Bank of England's £50 billion bond issue to try to create more liquidity in the mortgages market and bring down interbank lending rates. In Spain, the Daily Telegraph reported earlier this month, the government has sought to attract more investors by cutting capital gains tax.

In France, all the measures seem to have been introduced already and for different reasons. Moves such as allowing mortgage payments to be offset against income tax are part of the declared aim Mr Sarkozy made to turn France into a nation of homeowners rather than renters.

At the same time, as is regularly reported, France has not been hard hit by the credit crunch, mainly thanks to the lack of investment in the US subprime markets by its banks. This has meant that the sort of lending problems seen in places such as the UK are not present across the channel. With the country offering a myriad of attractions from the sun and beaches of the Cote D'Azur and the world's most famous wine-growing areas to the delights of Paris and the ski resorts of the Alps, France has plenty enough to encourage overseas buyers. But for investors there is the added fact that the country is still seeing prices on the up.

France specialist property website VEF repeated this message earlier in the week, noting that the country has seen a 3.3 per cent rise in prices in the first quarter, with areas such as Provence and the Alps enjoying a five per cent increase, accord to Fnaim, the French estate agents' federation.

Of course, the type of property being bought does depend on the purchaser and their intentions. Investors may be keener on buy-to-let in tourist areas while those retiring might want to go so somewhere off the beaten track, for instance. But VEF director Trish Mason said there were other differences as well. She told the Times: "At the lower end, people are downscaling their expectations and buying property that needs work, rather than postponing their purchase", while at the same time, "at the higher end, it's the people with money who understand the markets and know when, what and how to buy." She noted that the market has been doing well at the top and bottom, while taking a downturn in the middle, something she expects to change when the traditional buying season kicks in over the summer.

Those who are buying a property that needs work must ensure that, at a time when the one disadvantage to British investors is the value of sterling against the euro, the costs of doing so are kept down, according to Mary Hall, a chartered surveyor living in France. Writing in French Property News, Ms Hall suggested that for those with a finite budget the best way forward is to buy a property that is habitable but also amenable to being extended, while haggling, bargain hunting and choosing British paint over its "nearly always" inferior and more expensive French counterpart are among the best ways to ensure quality while keeping costs down. Investment, it seems, is not just about the cost of the house.