What's going to happpen to house prices in 2006?

15 Replies

I read a recent market review suggesting double-digit growth in the L-R this year. Given that Brits are saddled with mega-debts, the German's with recession and local French with regional poverty, the Dutch are all escaping to Australia and the Scandinavians couldn't care-less where are all the funds coming from to fuel the forecast rise rise? So, 15-20% or Burst-Bubble?

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james-482210 1142418332

I wouldn't be suprised if the p[rices increase dramatically in this area. The Brits are continually forcing prices up across the country, we only have to look at Brittany and the Riviera to see how! I think this area will be one of the next best options, beaches and sunshine at a lot lower prices! Brits have even started snapping up properties in limousin (which the french consider the armpit of the country!) so it bodes well for the money we've invested in our properties!

julianps-482116 1142422189


I have seen some truely shocking prices already this year and although it remains to be seen whether they sell at these rates I have a sneaking feeling some sellers have been sniffing something the rest of might like to find.

Example, I recently saw for sale a house that was originally on offer when I moved here in 2002. Still offered by the same owner it has now risen from an expensive €250,000 (in 2002) for €450,000 this year. This is for 150m2 with a small terraced garden and no pool. Yeah; right.

As a measure they also offer it as rental accommodation for €1,000 per week in high season. If the house sleeps 6 this is about 50% more other non-pool houses in the area (non-pool rates are approx €100-125 per person per week); but if it will accommodate 8 then it is about right.

So, assuming €1,000 per h/s-week is right, annual potential rental income is c€15,000 per annum, at 5% return values the property at €300,000, which is a little closer to the mark.

My personal feeing is that the challenge in todays market is that 1) foreign sellers are looking to realise the same rates of return they might get in their own domestic market (in terms of both rental incomes and asset appreciation); whilst, 2) local sellers are doing what they always do - pricing according to their needs and waiting for the market to catch up with them.

Eitherway, some prices feel overheated, whereas the market for sub-€200,000 properties, where over 60% of foreign buyers first pitch their offers, remains highly competitive (because the locals play in this market as well.).

However, with RFC World-Cup next year and a good spread of matchday destinations (Toulouse and Montpellier and Marsaille in this area) we could see a price bubble. Anyone who can get their house into good condition this year, and get some healthy returns onto their rental book, might be able to exploit this to their advantage later.

Limousin; might as well go to Turkey!

james-482210 1142423777

You're forecasting seems to add up! if we all invest well we could make our selves a tidy sum!


I moved here from the Riviera not so long ago, there one of my good friends is looking for a first time buy! 120.000 € minimum for a studio - these prices are nearly as crazy as London, where another friend of mine is selling a studio/1 bed outside of Richmond for £250, 000!


as the french would say incroyable!  

julianps-482116 1142424387


"incroyable, mais vrai".

Sam-482329 1147298751

The real pressure on the market is at the low end. In February of 2005 you could buy a village house in decent condition with a court or small garden for 125,000 to 140,000 in the Aude. By May last year there was nothing like that on the market.

Now you'd probably have to pay at least 175,000 unless you are willing to do a fair amount of work.

The other thing that is different this year is that people are buying more expensive properties, houses in the 300,000 to 350,000 range. And they are financing them rather than paying cash.

Definitely different this year, more activity, higher budgets. A different client. They are prepared to spend more but they also want more. If vendors are unrealistic when they price their houses the market will once again respond by slowing right down.

Sam


julianps-482116 1147301895

That's a great update Sam; thanks.

We run a price-watch on private sales and over 200 in the sub-150k€ bracket so there's definately a lively market in that price-bracket; nothing with the agents though because they won't get out of bed for less than 10,000€ on there's no margin in these properties.

I can tell you that up-to-250k€ is very, very fast-moving right now as well.

I agree about the market maturing; with great mortgage rates here (though the forecast is for rises...;-(( it makes sense to mortgage, especially and the Languedoc is doing 10% compound growth at the moment.

My belief is that buyers have the right to be picky at &gt1;350k€ and if that's where the markets growing it's great news for the perception of the region.

I was interested to read the returns from Notaires for 2005, showing that building land (on a per-plot basis) is now second only to Cote d'Azur - that tells you the Lamguedoc is "on the move".

Jules

myla-482289 1148380813

We've been in the region for a few years now and have seen the prices double in many areas.  The Express recently ran an interesting article that lists Herault as a very attractive place to live (except for security type issues).  One agent predicts the housing market will continue to climb for at least 10 years.  With access better than ever (TGV, inexpensive int'l flights, and improved autobahn access), there are many reasons to look in this area.  Given that there is still room to expand, my fears lie in how well managed these expansions will take form.  I don't like the cluttered look of some of the areas in the from Marseille - Nice.  

myla-482289 1148381184

I forgot to mention that what we are seeing more of in the under 320,000euros range are smaller house sizes and yard sizes than what you could find a year ago.  You are deffinately getting less and less for the buck.  And the competition is fierce!  Agents like to play all sorts of games to drive the price up as much as possible.  We've heard it all.  Owners don't seem to mind keeping the propery on the market longer to get the price they want (thus reducing the opportunity to haggle over the price).

julianps-482116 1148468908


Returns from notaires offices for the year ending July 2005 show that Languedoc Roussillon has the highest per-plot prices for new-build land outside of the Cote d'Azur.

Of course "price-per-square-metre" depends upon how big those plots are; so Myla's point of diminishing plot-sizes is especially relevant.

In fact those same returns for the last 7 years show prices for houses sold-on (ie excluding new-build) in the Region have been rising at approximately 10% per annum - meaning that the whole Region (taken as an average) has doubled over the last 7 years.

My feeling looking at this years market, and we've got resaerch on over 2,500 houses to back this up, is that the stupidity of 2004/5 is draining away and anyone thinking of dipping their toe into the Languedoc market this year is going to get more and better for their buck.

As Myla suggests; taken against the last four years, there's never been a better time to buy in the Languedoc.

alex-482358 1148488237




Just wanted to add my two penny worth to this interesting debate...

I am sure that many of you will have seen this (and is now a few weeks old) but it does certainly back up what has been said by others in this thread.

In a Paris press conference held on April 4th 2006, FNAIM president René Pallincourt announced his predictions for the French property market in 2006, as well as figures for the previous year, and it looks as though the tide is well and truly turning as far as the “go-slow” in real estate values is concerned.

FNAIM figures show that the south east of France (comprising Languedoc-Roussillon and Provence-Alpes-Côte-d’Azur) is the only place where real estate prices are currently growing at a similar or better rate than last year. Growth rates for French resale property (new build is not covered by the FNAIM figures) in the south east were a healthy 10.3 per cent for the first quarter 2006, up from 9.3 per cent for the same period the previous year.

Across the rest of the country, vendors will be gloomy as the downturn in growth rates for French property continues apace...

And the moral of the story? Look to the Languedoc (or pricier Provence, provided you’ve got the cash to splash) for a safe bet. Sustained, long-term growth combined with 300-plus days of rays per annum makes for a sunny outlook, whether you’re buying a holiday home, a house for retirement, a permanent pad or a pure investment product.

Languedoc Lover

Gary Lawrence 1152922820

My bank manager advised me not to purchase property for the moment in the Montpellier area. We've placed money in stocks and shares and a good holiday. Talking to French friends during BBQ's etc -quite a lot of people can't afford live here and prefer to rent in the hope prices will drop. Most of them don't have a choice anyway. I'd say the French first time buyers are now holding on looking to move away. We've a couple of friends moving this summer to escape into more affordable areas. I recently visited a friends house north of Bordeaux ans was amazed with what he got for the money. So obviously Montpellier prices need a good correction. What Will finally take out the steam of the Montpelier market? Wages are low around Montpelier,probably the lowest in France...so why the endles speculation? Unemployment is high too! I guess the high end property will continue to rise as long as the airlines propose cheap flights. Beziers want to extend the runway and bring in another low-cost airline....I think this area is where to invest and forget Montpellier for the moment.

julianps-482116 1153129569


My understanding from bits and bobs I've picked up along the way (could all be wrong of course....)

In 1999 there was a stated plan to drive the population of Montpellier from c400,000 to c700,000+ by 2005, and to generate a first-tier city in the south-central/Languedoc.

This was clearly designed to stay ahead on Nimes and to rival Nice/Sophia Antipolis, to hold onto IBM, Nortel and other "blue-chip" employers and to pull other hi-tech employers into the area.

Part of the plan (investing in employment) worked partially whilst the other part (investment in new and affordable housing) failed (on the back of losing both IBM/Nortel?). In a nutshell there were more people chasing fewer available houses.

Either way, house prices jumped some 30% in (was it?) 2003 or 2004 [I got this from midi-life.com but the site's down at the moment]. Most local folk then looked at the motorways and relocated to Sete, Frontignan, Clairmont l'Herault and the likes. This has had some effect at reducing the pressure on prices in Montpellier (less demand) but as to an actual "correction"; I think that misunderstands the nature of French negative-equity, a Frenchman's traditional relationship with property and the way the housing market operates here.

Mostly buyers who have negative-equity will wait until the market catches up with them, or else rent/lease if they have to move themselves.

I suspect Montpellier remains a good place to invest in the right property, but that might not be what you're looking for. There will always be a call for good, affordable housing on the estates and for decent student accommodation in the centre. As for the elegant, architect designed villa with pool on an acre two mintues from 'la Comedie - I think not.

So if you're moving to Montpellier for work or cultural reasons I guess I would join your bank-manager and recommend commuting, but it'll be a long communte because all the other commuters have distorted prices for miles around already.

But Perpignan? that's another story.

Gary Lawrence 1153155505

thanks for the input. I don't have to commute but do travel alot. I work from home on Mondays. Honestly, we could live in between the Rhone valley and Toulouse if we wanted to....but, we chose Montpellier for family reasons. It's nice here. The road works will be coming to an end soon and life will be back to 'normal'. I think we'll buy out of town and either Nimes or Beziers way. The wife doesn't want to be stuck in the country...and wants something calm too. Almost impossible..? I don't depend on the Montpellier economy for my work. However, anyone looking for work here must think twice. Be warned...it's not easy.

Cystrin-482236 1155168750

julianps wrote: "But Perpignan? that's another story."


Could we read another story please, julianps? You are obviously quite well informed of the trends in the property market and it would be interesting to learn what will happen in Perpignan.

julianps-482116 1155234815


...really only to say that Perpignan is a more stable market than Montpellier because the economy there is more stable. However certain areas have seen fantastic price growth and I'd bet the Perpignan area has more &gt1;1,000,000Euro houses per 1,000-head of population than Montpellier.

If one takes an area between the lagoon to the north, the Spanish border to the south and bounded by the motorway and the sea you can find suburbia, tourist hotspots, lakes, championship golf courses and prices ranging from 1,500Euro per square metre to 8-10,000/Em2 (in Collioure, of course).

Interestingly if you take the three coastal villages of Collioure, Port Vendres and Banyuls prices are approximately 8,000E/m2[C], 4,000E/m2[PV] and 2,000E/m2[B] - clearly where you buy near Perpignan "matters".

However on the other side of the motorway you have the "three valleys"; each with it's own property market and very different pricing models.

And then there's the little gems, like Thuir (famous for it's apperatif, distilled in what was the old railway station built by Gustaf Eifel and housing the world's(?) largest wooden vat) or Latour de France (made famous in the infamous book by Catherine M.) or; well any number of very pretty places really.

But before getting carried away it is close to the cold side of a big mountain range which makes it cooler and damper (condensation?) in the winter months, so DG and a good fire are a must!

Or another villa, in Florida maybe?

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