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French investment property continues buoyant

18th August 2005 | back to article listings BACK    print this article PRINT

The French property market saw price growth of 9.5 per cent for the year up to June 2005, say figures released by estate agents VEF, with apartments showing a greater return on investment than houses for much of the period.

The figure is a marked slowdown from the recent 15.5 per cent peaks in price increases during 2004, although many remain optimistic that growth will hit double digits this year.

The market was far from consistent, however, with a wide range of performance over the past 12 months, from price drops of 2.2 per cent to gains of 25 per cent. Interestingly, some of the most extreme contrasts were in areas only 200 kilometres apart.

As in the UK, some of the previous fastest areas of price growth, such as Paris, have been the first to feel a slowdown in price inflation.

Housing stocks with agents have increased by 15 per cent over the year with the number of transactions declining by approximately 20 per cent as many proposed purchases put on hold pending sale of another property.

Low interest rates in France and a more liberal lending policy have continued to fuel the increase in prices, as has the competition for property from overseas buyers.

"The first half of 2005 has shown a clear growth in demand not just for new build property but for investment opportunities across France," said Paul Owen of VEF.

"Since new build apartments and houses in France are bought off plan, without a brick having been laid, many of the buyers are investors who are often short of time and are confident enough to make their purchase without the need to visit the site in question. Their decision is made with confidence by studying plans and architectural drawings".

VEF has seen a 100 per cent year on year increase in sales, said Mr Owen, with only eight per cent of buyers visiting sites before purchase, and 98 per cent of all new build sales bought under leaseback schemes, indicating they are investment purchases

"The demand for new build property, especially leasebacks, where the rental income is guaranteed and the VAT is refunded, is likely to continue from the UK, where the property market continues to cool and notably from Ireland where investing in overseas property has become a way of life," he added.

Seventy three per cent of VEF buyers purchased with the aid of the legal service offered by VEF. The average value of new build property bought was surprisingly low at 143,858 euros.

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