France: Real estate prices will drop 30 to 40% in the next 4 to 5 years

The reversal has already begun… but it cannot be seen yet in the price indices. Since September, the market has clearly begun tougher, and we can observe a volume collapse, i.e. a diminution of the turnover figures. Especially in the second-hand market.

Today, only high-quality products (well located, high floor, without a need for alterations) sell easily, at price levels that continue to increase. So that one may have the wrong perception that the market is OK. One needs to see that the mean selling delay has reached 8 weeks, to be compared to 4 weeks in 2004. During the previous depression, 15 years ago, the price drop became apparent only in mid-1991, although the transaction figures were falling since the spring of 1990. The present reversal seems anavoidable. First, because the interest rates are going to increase, even by a small amount. And also because the buyers cannot afford a further mortgage duration increase.

‘It’s a little paradise’

A villa in Bordighera, Italy

As you travel along the Mediterranean coast from France to Italy the French Riviera becomes the Riviera dei Fiori, or “coast of flowers”. You leave behind Menton, with its famous microclimate, and arrive in the Ligurian border town of Ventimiglia in the province of Imperia. Hillsides that in France are covered in concrete are choc-a-bloc full of greenhouses here. Further west is San Remo, the city that each year sends blooms to Vienna’s Musikverein hall as decoration for its famed New Year’s Day concert.

Paris Real Estate Bucks Recessionary Trend

France's capital, Paris, has been a direct benefactor of Sarkozy's two year reign as prime minister of France, and seems to be taking the economic climate in its stride.

Its property market has remained stable and even seen a price increase in apartments, which the Notaire de France\'s October 2008 report revealed had increased by 10% this year. The commuter towns surrounding Paris, such as Orleans, Tours and Reims, have also seen a healthy increase in house prices of 10.5%.

The right wing Sarkozy Government has brought in a raft of laws which continue to stimulate the construction industry and create sustained demand for residential property.

French property sales holding up well as parts of the market remain popular

A glimpse of the Eiffel Tower, a view of the Mediterranean and the rolling landscape of the Normandy countryside are just some of the factors that are keeping property sales in France lively despite the global real estate downturn.

Properties in Paris, the Côte d'Azur and Normandy are continuing to sell as prices have become more realistic and demand has not disappeared. Indeed real estate professionals in these parts of France are reporting some signs of recovery in the market.

In their latest housing market report the French estate agents association FNAIM report that property prices fell by 1.7% in the first quarter of the year. This is considerably lower than in many o.......