Are second homes in France a good investment?

Reader Question: We love our second home in France but sometimes wonder if it is a good investment. Do French people still buy second homes as part of their investment strategy?

The fortunes made in property elsewhere (a terraced house bought in London for £90,000 in the 1980s, for example, will now be worth at least £600,000), are rare in France, where property prices have not risen as much.

However, for historical reasons – revolutions and financial crashes particularly – la pierre is still seen as a sure value in France, even when its yields are outstripped by stock markets. 

State statistics agency Insee calculates that real estate (mainly primary residences but also second homes and rental properties) represents 62% of total wealth for French people.

For second homes the investment picture is complicated by French inheritance law, where the estate is divided between siblings. 

It is not uncommon for these siblings to disagree on whether to sell or keep a house in the country, so it becomes part of the family's shared heritage by default rather than deliberate choice.

Another complicating factor is the nature of the French property market, where the cycles for rural properties differ from those of towns or cities. 

It took at least 10 years for rural properties, whose market value fell by an average of 25% in the financial crisis of 2007 and 2008, to bounce back to 2006 prices. And following recent interest rate rises, these prices are starting to fall again slightly, while those in cities have mainly gone up, in spite of the occasional hiccup.

People who buy second homes as an investment in France, especially in cities and seaside resorts, often rent them out through platforms such as Airbnb in what has become a very profitable business model. 

However, some of the shine has been taken off since the government insisted these platforms share the earnings information of properties with tax authorities. Some towns are also now restricting the number of days that properties can be rented out as tourist accommodation, which also reduces investment potential.

Turning them into traditional rental properties is not straightforward, not least because long leases mean they can be no longer used as a holiday home. Recent legislative changes to ban the least energy-efficient properties from the rental market have also been a deterrent for investors.

So the short answer is, yes, French people do still invest in second homes, but unless they are in cities or popular seaside or mountain resorts, they do not always expect to make a fortune selling them.