Bargains in new French property

[Premier French Property]

Econmonists at HSBC in France have just released the findings of a recent study which suggests the new build market in France may be a good place to put your money for medium to long-term investment.

[ptemple]

It doesn't sound like the next few months are a good time to invest if prices are expected to drop 4% in 2008 and then another 6% throughout 2009. In fact the title of that article appears to contradict everything written within!

Phillip.

[Premier French Property]

Thank you for your feedback.

The message of the article is simply that the price of new build property in France dropping at a faster rate than older properties.

I suppose the point is that, retrospectivley, a new build bought today is a bargain, and yes, may not be when compared to prices that HSBC say are expected throughout 2009. Who knows?

[ptemple]

A price reduction on a property in a market that is rising is a bargain. An across the board price drop on properties that are expected to plummet in price for the next couple of years is not a bargain. You wait a couple of years until the over-supply has been soaked up, and there starts to be more demand than supply. You then buy at the bottom of the curve and watch the value of your investment rise. I personally would not recommend buying French new build at the moment.

Phillip.

[Premier French Property]

All indications are that prices will fall by around 10% from now until 2010. They are not "expected to plummet". The effect, according to analysts, will be a correction, not a crash. For all sorts of reasons, France wil not see the market drop to the same extent as it has done in the US, Ireland and Spain. Currenty demand remains high with the French market considerably more stable than the majority of its European neighbours.

[ptemple]

Ok the word plummet may be over-stated, but that does not answer the question of why you would invest now in new build when it is expected to fall by 10% over the next couple of years? It does not seem to make sense to me as an investor. Surely a good time to look at buying a French new build would be 2010?

Phillip.

[DPA France]

So 6 months down the line and what is the reality after the predictions? French property prices are definitely falling - fact! Were prices too high? For sure! In Dordogne we are now finally seeing vendors accepting this fact and asking prices are dropping as a result.

Most offers are between 15% to 30% below asking price and we see conditions being loaded in favour of buyers until at least 2010.

Investors and people unnafected by the credit crunch who are able to take advantage can certainly secure what can now genuinely be called bargains!