French older properties market

• At the end of February 2018, the annual volume of transactions fell slightly: 965.000 transactions were completed over a twelve month period (as against 969,000 at the end of January 2018) for a 10.9% increase year on year. The annual volume of transactions thus developed at a slightly slower pace and two factors may suggest stabilisation over the coming months: the accumulated flow of new loans for households year-on-year continued to drop; 42% of banks reported a fall in home loan applications.
• The reasons for the higher transaction volumes since the start of 2015 are known: low interest rates, longer loan terms, targeted tax incentives, overall reasonable prices in the French provinces, and a larger stock of transferable properties. Notaries are now seeing a soft landing, suggesting more reasonable volumes for 2018, as the catch-up effect is no doubt felt.

Older properties : Prices still on an upward trend

• Year on year, prices continued to rise: +3.4% in the fourth quarter of 2017 compared with the fourth quarter of 2016, after +3.3% in the third quarter of 2017. This rise was particularly noticeable in older apartments (+4.5%) where the trend remained better than in houses (+2.6%). Nevertheless, over a quarter, prices of second-hand properties stabilised: +0.5% in the fourth quarter of 2017 (provisional seasonally adjusted figures), after +0.9% in the third quarter of 2017. As has been observed since the end of 2016, the upturn was greater in apartments (+0.7%) than in houses (+0.3%).
• This growth was more marked in Greater Paris, with a 5.1% increase in the sale prices of second-hand properties year on year in the fourth quarter of 2017 (after +4.6% in the third quarter of 2017 and +3.9% in the second quarter of 2017). Between the fourth quarters of 2016 and 2017, the price of older apartments rose 8.6% in Paris (where all the districts increased), by 5.2% in Hauts-de-Seine and some 4% in Val-de-Marne and Seine-Saint-Denis.
  In the French provinces, prices of older properties rose year on year less significantly than in Greater Paris, +2.7%, between the fourth quarters of 2016 and 2017. As in Greater Paris, the increase was greater in apartments (+3.3%) than in houses (+2.4%). However, these prices stabilised between the third and fourth quarters of 2017 (+0.3%).
• In terms of the major cities in the French provinces, for older apartments, prices were stable or on an upward trend in the fourth quarter of 2017. The only exception was Saint-Étienne, which posted a 4% fall in prices over the year. In Grenoble, Dijon, Nice, Montpellier, and Tours, prices were relatively stable. Bordeaux still hovered at the top, with a 16% rise year on year and a median price per sq. m. of €3,930. In Nantes, Annecy, Lyon, Lille, and Toulouse, the median price also rose significantly, between 5% and 8%. In the other major cities, the increase was more moderate, between 2% and 5%. In the major urban centres of the French Provinces, prices of older houses were rising. The sharpest increases came from Valenciennes (+9.8%), Nancy (+9.9%), Nantes (+11.1%), Saint-Nazaire (+12.3%), and Bordeaux (+14.1%). In Lyon and Marseille, prices were almost stable year on year. Thus, whilst prices increased in the other major urban centres, Nice stood out, as in the previous quarter, with prices on decline (-3.6% year on year).
• Thus, in areas where prices rose sharply, i.e. where demand outstripped supply, it was vendors who benefited from bank interest rates which, throughout 2017, remained at still low levels.

Older properties : price index forecast

• The price index forecast for the end of May 2018, based on pre-contracts throughout mainland France, expects prices will continue to rise in the case of older apartments (+4% year on year) or older houses (+2.2%).
• In Paris, early indicators on pre-contract predict that the upward trend is likely to continue at least until April 2018, when the price per sq. m. is expected to reach in the region of €9,300, a 9% rise over approximately one year. In the French provinces, the index forecast for pre-contracts follows an upward trend, though price rises will subside. At the end of April 2018, year-on-year trends are +2.3% for older apartments and 1.9% for older houses.
• Overall, notaries saw a downturn in transaction volumes at the very start of 2018, with prices remaining steady.

Credit – Banque de France data (February 2018)

• Mortgages outstanding continued to rise (5.8% year on year) and borrowing rates remained low (1.61% on average). The proportion of new renegotiated loans rose slightly to 20% in February 2018, though it remained low compared with one year ago (60% in February 2017).

French new housing market

• Cancellations were still very high, up 31.9% compared with the fourth quarter of 2016, and affected almost 3,800 units, an equivalent of 10.9% of reservations.

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