French property sales surge to record highs on excellent purchase conditions
French property agents and developers are all talking about a return to the heyday of French property sales in the middle of the last decade as sales surge on the weak euro and ultra-low interest rates, reports French Private Finance.
“One of our major partners has experienced record sales on new-build property in the Alps posting 40% of last year’s turnover in the last two months alone and the trend is set to continue for the rest of the season with idioms ‘selling like hot cakes’ and ‘des pains au chocolat’ being mentioned,” comments John Busby, Private Clients Director at French Private Finance.
“The biggest difference now is that current purchase values are much higher than they were in 2005 with many more people buying in the €1m+ range,” adds Busby. “Whilst non-resident transactions are up across France, the Alps are in special focus and with the all-time low for a 20-year fixed rate mortgage now at 2.65% for a standard client, we can certainly see the buying spree continuing for some time to come.”
“Sterling buyers have become more than 15% better off in twelve months but dollar buyers have by far the strongest position with almost a 25% difference year on year,” continues Busby. On average, over the last 12 months the Euro has fallen by more than 15% against the major currencies according to data from xe.com.
“The combination of cheap lending, low mortgage rates and softening house prices in some locations is sending the market into overdrive.”
French chalet market reaps benefits of Swiss decision to drop the CHF-EUR rate peg
Two months have now passed since the Swiss government stunned markets and dropped the fixed exchange rate between the Swiss franc and the euro. “Swiss property became 15% more expensive overnight and chalet buyers in particular were quick to turn their focus across the border,” adds Busby. “We were already seeing record numbers of €1.0m+ applications, but since the rate peg was scrapped the number of French ski chalet hunters has doubled.”
The Swiss National Bank introduced the exchange-rate peg in 2011 to provide some security while financial markets around the world were in turmoil. “With the CHF considered as a true save haven, investors flocked to the franc, driving up its value, which was a bad thing for Switzerland as it relies heavily on exports,” comments Lloyd Hughes at Athena Advisors. “Some say that the dropping of the rate cap was down to political worries about inflation, but largely it was because of the weakening Euro dragging it down and Mario Draghi’s plans for quantitative easing. Whatever the reasons behind the move, it has certainly stoked up the top end chalet market in France.”