France may not be the most popular destination in Europe for buying a second home but its property market has dodged the worst of the global recession.
Just how has it managed it though?
While France has its own financial problems at present, unlike countries such as Spain, Italy, Portugal and Greece, its property market has proved far more robust against the winds of recession.
That will be a huge relief for any Irish who bought there, rather than in more traditional locations such as the Costa del Sol or the Algarve.
The most recent figures from the French Federation of Estate Agents (FNAIM) show that although price increases are slowing, it expects house prices to have risen by up to 6% in France during 2011.
It’s not been all plain sailing though. Both 2008 and 2009 were difficult years with many estate agents reporting a 25% slump in activity particularly in the less fashionable rural backwaters.
But nevertheless the difference between France and Spain, which is still the number one destination for Irish and British holiday home buyers, are stark.
In Spain some 700,000 new builds stand empty and prices have dropped officially by 17% since 2007.
Also, many agents say that on the ground price drops have been nearer 30% in some coastal areas where demand is weak, and around 100,000 homeowners from Ireland and the UK who want to return home can’t as they wait for months and sometimes years to find a buyer.
So why the difference? The answer is that the French did not allow its property market to boom in the same way Spain did. While French bureaucrats gave the green light to modest new homes building in a few urban hotspots (such as Marseille), their Spanish counterparts let loose an almost unregulated construction frenzy – the results of which are obvious today if you drive down the Costa del Sol’s infamous coastal motorway.
The other difference was lending. In France it is still difficult to get a mortgage unless you have an income to match the loan, a large deposit and the patience of a saint to complete the paper work. But in Spain the Irish model of almost limitless lending and 100% mortgages was embraced.
So what’s France’s secret to success? To have been French, it would seem. All the things most people tend to dislike about them – an over-zealous bureaucracy and a cautious approach to credit – have so far protected their property market from the worst of the latest Euro turmoil.
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