the French property market - au revoir to the boom times?
The risk of an epidemic on the French property market from the
collapse of the sub-prime market in the United States is without a
doubt a threat in France despite attempts of President Sarkozy's
government to resolve the financial crisis that looks down over
France.
The French property market has entered into a reverse phase
since January 2008. After a prosperous ten year period property
transactions have fallen dramatically by 30% in the new built
market and nearly 15% in the old property market to reach its
lowest level since 1993/1994.
Property prices have also decreased by 5% in the last quarter of
2008 and the downward spiral is set to continue through into 2009
to a figure of 10%.
The main culprit in the degradation of the markets, are the
banks. The lack of liquidity in banks has considerably affected the
cash available for private borrowers. Conditions to obtain a
mortgage have been squeezed and interest rate increases have shown
a reduction in mortgage approval by 25% in the last quarter of
2008.
Despite the alarming figures the overall property market should
start to stabilise in 2009 and the recent declaration by Mr
Sarkozy's to back the banks will hopefully boost the property
market in the short term and regain the confidence of the investor
to buy and sell.
It was suggested by the Confederation of Estate Agents (FNAIM)
that stamp duty on transactions should be reduced to improve
borrower's financing.
