Prices are starting to fall

ESTATE agents are seeing renewed interest in French property from overseas buyers, as new figures show prices have started to fall across France since last autumn.

Prices were down 0.7% year on year in both the last quarter of 2011 and the first quarter of 2012, notaires figures reveal.

The drop is not yet enough though to wipe out rises in the previous six months – meaning prices are still up 1.3% over a year – but agencies are predicting further declines from now until the end of 2013.

Coupled with the strength of sterling against the euro, many agencies and currency dealers say there is new interest in buying from abroad.

The fall in prices is being blamed on reduced access to loans – as well as the ending of the previous government’s artificial aids such as the interest-free prêt à taux zéro. The Banque de France says new mortgage lending in April fell to €6.2bn, 47% down on April 2011.

Credit ratings agency Standard & Poor’s has forecast a price slide of 15% by the end of 2013 while leading estate agency Century 21 – along with fellow agency Orpi and estate agents’ body Fnaim – sees prices being trimmed by only 5% as they believe there is still considerable appetite for investing in property.

The volume of sales is certain to fall in 2012 and reduced demand will hit prices. Century 21’s Laurent Vimont told Le Figaro he expected its business to fall to 650,000 transactions this year as against 780,000 in 2011.

Even in Paris, sales are slowing and prices have eased from a 1.4% rise in the third quarter of 2011, to a 0.3% rise in the final quarter and a 1% fall in the first quarter of this year.