Investors in buying mood before property prices and rates rise more
Large French towns are seeing prices rising while mortgage rates are still near the bottom
Property prices are rising in large French towns as people who can afford it are getting in quickly, hoping to invest at the start of the next boom.
A market study just released by MeilleursAgents.com confirms its results from last month that the market is on the rise, showing that despite recent small increases in mortgage rates and prices they are still very attractive for investors.
The Banque de France also reported that mortgage loans last year broke "all the records" with €251billion of loans agreed by banks for individual sales. In all, 45% of this was for re-negotiated mortgage deals and mortgage broker Cafpi said this figure was "way beyond all dreams".
Over just two months, the MeilleursAgents study showed that prices in Paris have increased by 2.4% this year and average prices are close to those of the peak in 2011. Even in the close suburbs – la petite couronne – prices are up 1.2% since the start of the year while, farther out, the average increase is 0.9%.
Last month, notaires in Paris and Ile-de-France said their figures showed a 5.6% rise over 12 months, with prices now averaging €8,520/m2 in pre-sales negotiations.
Bordeaux, Lyon and Nantes are also showing strongly with Bordeaux up 4.3% since the start of the year, Lyon is up 5.4% over the 12 months but saw a slight drop at the turn of the year, while in Nantes prices rose 2.2% in January and 0.8% in February to make a 4.3% rise over 12 months.
In Marseille, Montpellier, Toulouse, Strasbourg and Nice price rises are between 1-2% over 12 months.
When looking at the market for older properties – called ‘ancien’ in immobilier terms – investors with good profiles can easily get a loan at 1.65% over 20 years and those with the best ratings can even hit 1% on shorter terms.
MeilleursAgents.com president Sébastien de Lafond told Les Echos that the “market was clearly dominated by the weak interest rates which have stabilised around 1.65% over 20 years.
“Despite a troubled national and international political situation, the surprise drop in return from government bond yields – 10-year bonds were at 0.9% in February – postponed, at least temporarily, the prospect of a sharp rise in mortgage rates.”
Hervé Hatt, of finance comparison site Meilleurtaux.com, told the paper that the “psychological 2% barrier is far away for the moment and the rates are very close to the record from October-November 2016”.
He said 25-year mortgages, those generally favoured by first-time buyers, were still at their lowest and the slight rise in rate was far from affecting the financial capabilities of households.
Property prices are rising in most large towns and Mr de Lafond said buyers were feeling they needed to speed up buying plans before rates rose even more and they lost out on the best prices.