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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 is, today, an exceptionally stable country
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 an extremely stable country. The last Fragile State Index reported for this country is 28.3, which one of the highest scores in the world.
France's exceptional stability today can be attributed to its robust democratic institutions, which ensure a balance of power and uphold the rule of law, alongside a strong social welfare system that mitigates economic disparities and fosters social cohesion. Additionally, France's active role in the European Union and international diplomacy reinforces its geopolitical stability and economic resilience.
All good for the stability. Now, let's redirect our attention to the economic forecast.
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 2024 with a growth rate of 0.7%, which is quite flat. Regarding 2025, the consensus estimate is 1.4%.
However, this low number is just for the short-term, as France's economy is expected to increase by 6.3% during the next 5 years, resulting in an average GDP growth rate of 1.3%.
A moderate growth rate in France suggests a stable and predictable economy, which reduces the risk of property investment and makes it easier to plan for the future. Additionally, steady growth often leads to gradual increases in property values, providing potential for long-term appreciation without the volatility of rapid market changes.
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 -7 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 -5.
A negative Business Confidence Index among local businesses in France can adversely affect the property market. This may result in reduced investment, slower property price growth, and fewer options for buyers. In such a climate, finding motivated sellers or securing favorable financing options can be challenging.However, it's important to understand that this negative sentiment alone does not have the power to determine growth. History has demonstrated many instances where a negative BCI did not prevent subsequent periods of strong growth. Therefore, it is essential to expand our perspective and consider additional data points.
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 2025.
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 2025.
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 2025.
Everything you need to know is included in our France Property Pack
In France, inflation is anticipated to be minimal
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 1.0%, which gives us an average yearly increase of 0.2%.
It means that France is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Is it a good time to buy real estate in France then?
Now it's time to draw our conclusions.
2025 is shaping up to be a fantastic time to buy property in France, and there are several compelling reasons for this. First off, France is known for its exceptional stability, both politically and economically. This stability provides a solid foundation for property investment, as it reduces the risks associated with market fluctuations. With the French economy expected to grow by 6.3% over the next five years, averaging a GDP growth rate of 1.3%, the country is on a steady path that promises predictability and security for investors.
Moderate economic growth in France is a good sign for potential property buyers. It suggests a stable and predictable economy, which is crucial for reducing investment risks and making future planning easier. This kind of steady growth often leads to gradual increases in property values, offering the potential for long-term appreciation. Unlike markets that experience rapid and volatile changes, France's moderate growth provides a more reliable environment for property investment.
Another factor to consider is the current trend in building permits. France is issuing fewer building permits, which means that the supply of new properties is limited. This scarcity can drive up property values over time, making it a smart move to invest now before prices potentially rise further. Additionally, French property values have been on the rise for five consecutive years, indicating a strong and consistent market that is likely to continue this upward trend.
Moreover, the French population is gradually becoming wealthier, which can lead to increased demand for property. According to Numbeo, rental properties in France offer gross rental yields ranging from 1.5% to 4.2%, providing a decent return on investment for those looking to rent out their properties. With minimal inflation anticipated, the purchasing power of both buyers and renters is expected to remain stable, making 2025 an opportune time to invest in the French property market.
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.
-Will real estate prices go up in France?
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.