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Everything you need to know is included in our France Property Pack
Are you thinking of buying property in the Hexagone? Are you wondering if now is a good time to make a move?
People have different thoughts about market timing. Your friend from Nice might tell you that now is the ideal time, while your French colleagues may think that prices will soon decline.
At Investropa, when we create articles or update our pack of documents related to the real estate market in France, we use verifiable facts and concrete data, not just subjective opinions.
We have carefully gathered and analyzed official reports and government website statistics. Using this information, we have created a reliable database. Here's what we found that can help you decide whether it's a good time to buy real estate in France.
Have a nice read!
How is the property market in France now?
France currently stands out for its remarkable stability
Positive
Stability is the first indicator to look at because it fosters steady rental income and potential capital gains, making it a fundamental criterion for real estate investments. It is an information you need as a foreigner looking to buy real estate in France.
You probably already know that France is a very stable country. The last Fragile State Index reported for this country is 30.9, which is an exceptional number.
France has a strong and consistent political system, with a long history of democratic governance and a commitment to the rule of law. Additionally, the country has a well-developed welfare state and strong economic performance, which have helped to ensure a high degree of social stability.
Now, let's examine the predictions for the economy.
France will keep growing steadily
Positive
Before buying real estate, assess the country's economic strength.
In line with IMF predictions, France is set to conclude 2023 with a growth rate of 0.7%, which is quite flat. Concerning 2024, the consensus estimate is 1.3%.
However, this low number is just for the short-term, as France's economy is expected to increase by 6.7% during the next 5 years, resulting in an average GDP growth rate of 1.3%.
A moderate growth rate in France still provides investors with a stable and reliable return on their investments, and indicates that the market is unlikely to experience any sudden downturns in the near future.
Nonetheless, GDP growth is not the only metric to look at.
French business owners show concern regarding the economy
Negative
How do the French perceive their economy? The GDP forecast is not the sole determinant of their perception. Thankfully, in France there exists an official metric that is consistently published. It's not the case for every country, so we're lucky.
The Business Consumer Index (BCI) is a measurement that indicates the level of confidence business leaders have in the current and future economic conditions. It's derived from surveys and assessments.
According to the INSEE's data, the latest Business Confidence Index value is -5 for France. To help you with interpretation, a pessimistic outlook is typically associated with a negative BCI score.
A year ago, business operators were not very confident either. The BCI score was at 3.
A lack of confidence among local businesses in France can impact the property market negatively. It can lead to decreased investment, slower property price appreciation, and a limited range of choices for buyers. Finding motivated sellers or securing favorable financing options may present challenges in such an environment.
However, it's crucial to realize that this "sentiment" alone lacks the power to dictate growth. History has shown numerous instances where a negative BCI didn't hinder subsequent periods of robust growth. Therefore, it is imperative for us to broaden our perspective and examine additional data points.
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France is providing less building permits
Neutral
If you want to know if it's a good time to buy property in a country, it's helpful to look at how many permits have been given for construction projects. More building permits being delivered reflects an expanding and flourishing property market.
Unfortunately, the number of building permits granted is falling in France.
Within the last year, according to Ministère de la Transition écologique et solidaire, the number of building permits issued by the French municipalities fell by 4.9%, from 496,900 to 472,800 units.
Clearly, this is a negative sign. Let's explore further data.
One last point to consider - a decline in building permits directly affects the availability of properties. In such a situation, it is probable that housing prices will see an increase in France in 2024.
French property values have consistently risen for five consecutive years
Positive
France's home prices have increased by 27.1% in 5 years according to eurostat.
It means that if you had bought a cottage in Burgundy for $350,000 five years ago, then it would now be worth around $445,000.
This growth has been stable and steady.
Definitely, based on this data, the French property market presents a promising opportunity for investors, signaling a favorable environment to enter. However, it may be wise to consider waiting for a future market correction to potentially secure better prices before making your investment.
You can find a more detailed analysis of the real estate prices in our property pack for France.
Everything you need to know is included in our France Property Pack
France's population is getting (a bit) richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In France, the average GDP per capita has changed by 1.7% over the last 5 years. Though not substantial, there is still a positive trend of growth.
This means that, if you purchase an apartment near Bastille and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is predicted to increase in French cities such as Paris, Marseille, or Lyon in 2024.
You'll get weak rental yields in France
Neutral
Rental yield is a common factor considered in real estate investing.
It represents the annual rental income generated by a property divided by its purchase price or market value, for instance, if a property is purchased for €200,000 and generates €20,000 in annual rental income, the rental yield would be 10%.
According to Numbeo, rental properties in France offer gross rental yields ranging from 1.5% and 4.2%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in France.
It means that your ability to generate substantial returns from a property investment may be limited.
As previously observed, the supply of real estate will remain constant, indicating that property prices are unlikely to change. However, there might be a slight growth in the number of affluent tenants. Consequently, rental yields might increase in France in 2024.
Everything you need to know is included in our France Property Pack
In France, inflation is anticipated to be moderate
Neutral
Simply put, inflation is when your money buys less than before.
It's when your usual SNCF train ticket costs 85 euros instead of 80 euros a couple of years ago.
If you're contemplating investing in a property, high inflation can bring you several benefits:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby boosting cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
According to the IMF, over the next 5 years, France will have an inflation rate of 10.8%, which gives us an average yearly increase of 2.2%.
It means that France could experience a moderate rate of inflation in the future. Then, prices would rise. It might become more expensive to buy in the future. However, if you buy now, your investment might appreciate and you can sell for a higher value later.
Is it a good time to buy real estate in France then?
Now it's time to draw our conclusions.
Undoubtedly, 2024 presents a highly opportune moment for property investment in France, supported by a range of strong indicators. France's exceptional stability offers a secure foundation for investors, creating a favorable environment for property transactions. This stability minimizes risks and fosters investor confidence, contributing to the overall attractiveness of the real estate market.
France's steady growth trajectory further bolsters its appeal for property investment. The anticipated growth suggests potential for property values to appreciate, offering investors the prospect of capital gains over time. Coupled with the consistent five-year rise in property values, this upward trend underscores the robust nature of the French real estate market.
The positive trend of France's growing population's increasing wealth reinforces the demand for housing and real estate, contributing to the potential appreciation of property values. While the neutral signals of fewer building permits and weaker rental yields are noteworthy, they are outweighed by the overall positive indicators pointing to France's property market potential.
Even though French business owners express concerns about the economy, the combination of remarkable stability, growth, consistent property value appreciation, increasing population wealth, and moderate inflation positions 2024 as an optimal time for property investment in France. Careful evaluation of these factors in line with individual investment goals is crucial for making well-informed decisions.
We sincerely hope this article has provided you with beneficial information!. If you need to know more, you can check our our pack of documents related to the real estate market in France.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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