British home owners with properties in France are being warned that the French housing market is in “free fall”. There are a number of things that are contributing to this but the biggest is that the French people voted in a tax and spend socialist government.
House Prices
The result of these falling house prices means that the end for the property boom has definitely hit France and has left those who spent their savings on property there with a less valuable investment.
200,000 British people currently own a property in France and it has been reported that the sales levels are declining rapidly because of homeowners’ ambitious asking prices. The CEO of the Guy Hoquet agency, Frederic Monssu, has said, “Convinced that their housing is the most beautiful and because a neighbour has sold theirs for a good price, the sellers will now lower theirs. The result is that the transaction does not happen.”
Other Factors
There are other factors affecting the housing market not just the high taxes required from the Government. Tighter credit controls are also playing a big part in the housing market declining. The introduction of a huge tax increase of foreign investors buying second homes in France will also have a devastating effect on the market.
The new law will mean that an extra 15.5 per cent will be charged on top of the taxes that are already associated with second homes. This means the fee will increase from 19 per cent to 34.5 per cent.
The Future
Many are predicting that there won’t be a complete collapse in the market but prices are expect to drop by 10 per cent over the next few months. These reports are coming at the same time as news of the double dip recession that the Eurozone could be facing.
Those in Britain who have bought a property for rental purposes in France may benefit as people will be staying in their rental properties for longer meaning a more stable income for landlords. The situation in the housing market may become similar to what it is for Britain. However, if this is true demand will greatly outweigh supply in the rental market meaning prices will increase and even less people will be able to afford to buy a home of their own. This increased demand though will make life a little easier for landlords and ease the purse strings when it comes to paying for things such as landlord insurance.