MY FRENCH PROPERTY  l e   b o n h e u r

Market conditions

2004-5

MARKET CONDITIONS:

The SW of France remained a popular choice with investors through 2004 once again outperforming the national average. Strong levels of sales have been continued feature of 2005 marked by substantial confidence amongst French buyers. This has been somewhat balanced by a lower volume of international buyers in the first quarter than seen over the same period in 2004. This may be attributed in part to caution running up to the British Parliamentary elections.

Interest rates remained low through the year and banks were competing for clients. As a result of attractive offers and a tendency towards longer lending periods the average level of borrowing increased through the year. This has placed pressure on the entry level of the market with demand still outstripping supply.

Prices for apartments have outperformed houses over the last 12 months partly due to a range of tax incentives for local investors.

We are seeing markedly higher levels of supply of housing in the market place with stocks increasing by around 30%. As a result the rate of increase in prices has slowed to a level approaching 12 % per annum. 2004 saw increases in housing prices in the region of 18%. The average French house is now fetching around 2000 euros per square meter although we are finding rural properties in the SW are averaging a more modest 1800 euros per square meter. The Basque coast has proved to be a hot spot however with average prices for apartments in Biarritz now running at around 3750 euros per square meter narrowly outstripping those of Cannes on the Cote d'Azur.

Interest rates remained low through the year and banks are competing for clients resulting in attractive offers and a the option of longer lending periods

FORCAST: We are expecting to see a continued brake on the price escalation with fairly stable prices being established through the second half of the year with pressure on a few sellers to market their homes at competitive levels.

2003

M.Bonheur

2002
 

A detailed analysis of the market indicates that the average house sale averaged € 140000 during the year 2002 and the average value per m² 1410 € with little variation per m² between small and large homes.  

The value of apartments showed stronger variations however with small apartments costing 16% more on average per m² than those with 5 main rooms or more. 

Average Prices

studio	€ 55 630
2 room	€ 93 270
3 room	€ 127 970
4 room	€ 146 460
overall average	€ 117 470

Since 1998 this represents an average annual increase of 9.2%.

Regional variations reflect the difference of buying power, quality of life, economic development and the geographic and climatic appeal.

The volume of demand has risen in the last three months though there is evidence of  more price consciousness within the British client base due to the recent currency slide.

There is a high percentage of buyers looking to do gite business and we have some concerns that this market will become saturated in the next couple of years if this trend continues. There are many investment opportunities however with some properties offering net returns after costs, pre tax of around 8%.
 

2001

Despite the attacks of the 11 September the market has rebounded rapidly and is reaching unexpected levels of growth. Despite a reduction in transactions in the last quarter 616000 transactions were registered during the year. 

Over the last 5 years the volume of transactions has increased at a rate of roughly 4,9% per annum. There are several factors which help to explain these statistics. 

• a reduction in transfer  costs

• an economic revival which has been constant over this period

• reduced rates of borrowing

• stability in demand which has lead to more consistent and realistic pricing across the marketplace. 

The SW has been the best performing area in France for older homes with the market being dominated by house sales with relative weakness in the apartment sector.  Old homes have risen by 13,6 % whilst apartments have only risen by 3,9%.

Prices realised on average:    1 296 euros / m² in the SW. (Source FNAIM)

The highest growth has once again been experienced in the fine home market where  6% of sales were registered to foreign buyers. 

The average holiday home is held for a period of 8 years and the average permanent home for a period of 13 years. 

Many experts have predicted a slowdown in demand for 2002.  Our experiences this year run contrary to this expectation with demand  far outstripping that of previous years. This is being balanced by a good supply of property at the moment.  House prices in the SW still provide some of the best value to be found across central Europe.  These factors are  helping to keep prices progressing upwards at levels we believe to be  sustainable for the foreseeable future.   

2000

Real estate in France has enjoyed sustained growth over the last three years and fine homes have risen by as much as 25% over the last year alone. The Côte d'Azur/Provence region  proved to be the most popular region for  purchases of secondary homes last year with average prices around  2.5 m ff. The Dordogne the second most popular choice with average prices around 800 000 ff, the Haute- Savoie region of the Alps followed with prices averaging around 2.5 m ff whilst the Gers was fourth on the list with prices averaging around 1.6 m ff. 

Despite the increase, there is still good value to be found in French real estate due to the following conditions.

1. Notaires fees and purchase taxes have been reduced from 12.5% to around 6.5% over the last three years.   

2. The  Euro close to all time lows. The Franc has lost 40% of its recent value against  Sterling.

3. France still enjoys low interest rates. 

If you are wanting to acquire a house in France the conditions are currently most favourable.

There is a shortage of fine property for sale in Gascony, but the position has eased slightly over the last few months and we currently have a small selection of attractive homes in most price categories.

The fact that we are based in France means that we are in a position to offer professional hands on service and support starting with your search for a home, attention to the specifics related to the purchase and following through with help and advice to ensure that you are comfortably settled. 

Feel free to ask any questions about the region, life in France or details pertaining to purchasing property in France. If you don't find what you are looking for on our site, let us know your requirements and we will endeavour to find it for you. 

Our agency is based in  South West France,  in the heart of Gascony. It is a magnificent region bounded to the West by the Bay of Biscay and to the South by the Pyrenees Mountains. Today these co-ordinates account for the  regions varied attractions. Both the ski slopes of the Pyrenees and the bleached beaches of the Atlantic coast lie within easy reach of a days outing.   

If you are looking to improve your  quality of life, the region offers the cleanest air in Europe, low levels of crime and absence of traffic congestion resulting in one of the longest life expectancies in the world!  

Contact us if we can help with travel arrangements or accommodation in the area. We have a good selection of houses and gites for holiday rental and can suggest an itinerary with stays at some of the excellent chambre d'hotes in the area. 

Hankering for History
Boosts Castle Sales

By JUNE FLETCHER
Staff Reporter of The Wall Street Journal

From The Wall Street Journal Online

 

April 22, 2002 -- Olivia Decker's home is her castle. In fact, two of them are -- both French and built in the 17th century. "They make me feel like a queen," says Ms. Decker, who spends most of her time at a house in northern California.

Think the U.S. real-estate market has been strong? Well, the foreign castle market has done even better. Chateau brokers say business has jumped as much 20% during the past two years, helped by everything from the euro (it's been weak) to the Internet (it's made properties easier to find) to comparatively low prices that mean you can pick up an 18-room castle for less than a two-bedroom in New York. The result: For a select group of people these days, a house isn't worth buying unless it has a moat. People "want to buy a bit of history, even if it's not theirs," says Alexander Kraft of Sotheby's International Realty, a big player in the business.

While the number of sales is still small, brokers say the hottest markets are in Italy or Austria, where a picturesque schloss runs into the millions. But in many other places, you can pick up a castle for surprisingly little. One South African manse is going for just $365,000 (the armor, antiques and rugs will cost you an additional $98,000). In France, the government will even help pay to fix up your chateau. True bargain hunters look east. In the former East Germany, some rundown historic castles are available for a single "symbolic" euro (though new owners must agree to invest $1 million or more on repairs), and in Poland, you can pick up a palace for about $80,000.

No Comforts of Home

But don't expect all the comforts of home. "It's not unusual to have 50 bedrooms, one bath -- and no roof," says Sotheby's Mr. Kraft, who also warns buyers to expect drafts, leaks and vermin. Castle owner Jay Morton -- he bought a 17th-century chateau near Biarritz, France, for $700,000 -- spent an additional $400,000 fixing up his place, including putting on a new roof and replastering the walls. The biggest surprise: He had to import all the furniture from the U.S. because he found French antiques too small and too delicate for his 7,000-square-foot castle, as well as for his 6-foot 2-inch frame.

Castles, of course, have long had cachet, and the market has been strong before -- especially during the booming '90s -- so why the rush now? Analysts point to the weak European economy, which has lagged behind the U.S.'s, making exchange rates favorable. And while properties in major cities have shot up in price, castle prices haven't climbed at the same rate, making them relative bargains. Finally, many wealthy buyers are looking to keep their money out of stocks, and they are especially attracted to real estate with a pedigree.

The word castle itself comes from the Latin castellum, for "fortress," and the earliest ones -- huge, thick-walled homes -- date back to about 500 A.D. More elegant versions sprang up in the early middle ages, emphasizing design over defense, with formal gardens and fanciful turrets in place of battlements. Until recently, it was pretty tough to find one to buy: There's no castle multiple-listings service, and many sellers don't advertise, for fear of everything from attracting the notice of tax authorities to having long-lost relatives protest, French broker Kay C. Van Der Jagt says.

But a host of new Web sites and services has made it easier to castle-shop. Last year, Web site Castles of the World had just four places for sale; now it has 15, including an American castle in Berkeley Springs, W.Va., (it's up for auction) and the South African palace. In some cases, buyers even get a title along with the title -- one 20-room French chateau carries with it the right to be called a duke.

The actual historical connections can be tenuous, though. Gail Ball recently bought a 17th-century Caribbean complex known as "Blackbeard's Castle," in St. Thomas. Does that mean the legendary pirate lived there? Well, maybe. "We haven't been able to establish that," Ms. Ball says. "But it gives it a pirate's mystique."

Like a Yacht

Heinrich von Hanau, a Miami developer, says castle life isn't all it's cracked up to be. (He'd know, he was born Prince Freidrich Wilhelm Hanau Count Chaumburg.) His biggest memories of his family's 15th-century Austrian palace: dark, spooky hallways, and not knowing whether he'd get hot water -- or any water -- when he turned on the tap. "Owning a castle is like buying a big yacht," he says, with equally big costs for staff and maintenance.

Indeed, the electricity bills alone on the Fez, Morocco, palace that Kouloub Cotrell and her relatives own run $6,000 a year. It is, after all, 27,000 square feet, with a music room big enough for a full orchestra. And the repair bills are so high at Christopher Kump's place -- a 12th-century Austrian schloss inherited from his grandfather, that he's decided to sell. The only problem, says the Fort Bragg, Calif., carpenter: It's hard to show when he lives 6,000 miles away. Then there are the quirky local laws. At one point, Hollis Baker, who has owned seven castles during the past 30 years, became a farmer, because he worried that, under French law, his neighbors might have the right to buy his untilled fields.

Despite all the headaches, some new owners say they're sold on castle life. Ms. Decker spent $5 million for her latest chateau, a palace near Versailles, then put in $1 million more to modernize it. Even so, she says, it's a "great value" compared to what the same money would buy back home. And Mr. Morton won't be pulling up the drawbridge anytime soon. Not only is he the envy of his American friends, but his new French neighbors treat him royally, even throwing a special dinner for him after the annual summer festival. "I'm living out the ultimate fantasy," he says. "I'll keep this house forever."

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