French property market report

French property
market report
N° 25 - OCTOBER 2014
NOTAIRES-INSEE INDICES (base 100 at Q1 2010)
PRE-EXISTING FLATS
Index value
(SCP)
Variation*
PRE-EXISTING HOUSES
Index value
(SCP)
Variation*
Q1 2014
Q2 2014
3
months
Mainland
France
111.2
110.6
-0,5%
-1,3%
101.8
102.0
0,2%
-1,2%
Greater Paris
119.4
118.8
-0,5%
-1,4%
105.5
104.8
-0,6%
-3,3%
French
provinces
103.7
103.2
-0,5%
-1,1%
101.0
101.4
0,4%
-0,8%
1 year
Q1 2014
Q2 2014
3
months
1 year
* 3-month variation: development between 2014 Q1 and 2014 Q2 * 1-year variation: development between 2013 Q2 and 2014 Q2.
Downward trend in prices confirmed
Analysis
THE SECOND-HAND
PROPERTY MARKET
In Greater Paris, the new advanced indicators
for the whole of the region2 suggest that the
selling prices of flats and houses will remain
almost unchanged during summer 2014. The
trend is roughly the same in the provinces.
Nationally, the Notaires-INSEE index in the
second quarter of 2014 showed a fall in prices
for existing properties of 1.3% over the year,
compared with 1.9% in the first quarter. The
pace of the fall is slowing and prices are flat
compared with the previous quarter, with flats
down and houses up (see table of indices).
To summarise, the downward trend is
confirmed, this being slightly more marked
in Greater Paris than in the provinces. The
cumulative fall in the national index amounted
to 4.4% since the peak in the third quarter of
2011. Despite weak inflation, this is equal to a
decline of 7.5% in real terms. Local contrasts
are strong depending on the location and the
type of market (main or secondary residence
or rental investment). This can sometimes
produce a gap between the strategic results
and the feeling among local players as the
representation of markets where there is little
activity is weak in the aggregated results,
particularly if their prices are low.
Prices
In Greater Paris, the pace of the annual fall
saw little change compared with the previous
quarter (2% vs. 2.1%), with a stronger dip for
houses of 3.3% than for flats 1.4%.
In the provinces, the dip in prices saw a
marked slowdown: of 0.9% compared with
1.8% in the first quarter. Over the quarter1,
prices actually saw a slight rise of 0.1%
boosted by house prices (cf. table of indices).
The one-year movement in the median
transaction price in the provinces confirms this
downward trend but in a two-speed market:
sINTHElVEBIGGESTPROVINCIALTOWNS-ARSEILLE
Lyon, Toulouse, Nice and Nantes), the market
is putting up a better resistance than in other
places, with prices stable or slightly higher. The
only exception was the market for old housing
stock in the conurbation of Nice where prices
fell by 2.7% of one year;
s IN OTHER TOWNS AND CONURBATIONS AT
«département» level, prices fell in more than
50% of cases.
At the end of June 2014, the number of
transactions concluded over the past 12
months was estimated at 735,000 in mainland
France, a 9% rise over the year. The rise in
Focus
« Number of
properties for sale is
up and selling times
are getting longer »
Projected data adjusted for seasonal variations.
Two other new indicators are available. These are for flats in the inner suburbs of Paris and houses in Seine-et-Marne.
General Commissariat for Sustainable Development.
4
Indicator of sales of detached houses on individual plots of land produced by Caron Marketing.
volumes saw a pause, which was explained
notably by the implementation of the provisions
of the ALUR legislation pertaining to property
sales.
In Greater Paris, sales volumes stagnated
to a low level but here was, however, a rise
of 2% over one year (5% for flats and 1% for
houses), which amounted to 12% for flats in
the capital.
Generally speaking, notaries report, particularly
based on the number of advertisements
appearing on the immobilier.notaires website,
that throughout the country, the number of
properties offered for sale is higher and the
selling times have increased very markedly.
NEW-BUILD MARKET
According to the Sit@del2 database, extract
from CGDD memorandum number 560
of September 20143, «Over the past three
months, compared with the 3 previous
months, the number of authorised properties,
expressed as SCP smoothed data rose by
2.3%. The number of residential start-ups fell
by 0.8%.» The number of authorisations issued
over the past 12 months between September
2013 and August 2014 fell over one year by
13.9% and start-ups by 11.6% to a figure of
303,218 units. The figure for detached houses
was down by 18.3%.
Sales of detached houses in general were less
negative according to Markémétron4 (extract
1
2
3
French property
market report
N° 25 - OCTOBER 2014
(Analysis)
from the memorandum of July 2014), «Over
the past 12 months, gross sales of detached
houses on individual plots of land amounted to
approximately 102,300 units, a fall of roughly
8% compared with the previous 12 months.
Over the last 3 months there was also dip of
about 8% in house sales compared with the
corresponding 3 months of 2013».
The average selling price per square metre for
flats was greater than in 2013 in more than half
of the regions in mainland France. The fall of
prices in 10 other regions compensates for
this rise and prices overall in mainland France
remained stable at -1%».
To prevent selling off their programmes some
small promoters need to sell their building
permits.
According to the ECLN survey of the CGDD
(extracts from memorandum no. 521, May
2014) on the property development market, «In
the first quarter 2014, sales of new properties
fell by 12.1 % compared with the first quarter
of 2013. down 10.9% for collective properties
and down 23.2% for individual properties. In
order to contain the high stocks against this
backdrop of low sales, the number of properties
put on the market is still down (by 22.4%).
Therefore the number of unsold properties on
the market at the end of the quarter stabilised
for a year at around 104,000 properties. In
addition the number of properties for sale taken
off the market remained at high levels, 15.3%
more compared than last year. Non-binding
deposits on almost 2,000 properties were, for
example, cancelled, which is equivalent to 10%
of the properties under offer.
1
Info – August 2014), production of new
home loans to households returns to above EUR
9 billion in August (expressed as SCP forecast
data). Interest rates fell further. At the end of
August, the rates for home loans (long-term and
fixed-rate) amounted to 2.90% compared with
3.05% in June and
3.2% in March. According to the Housing
Credit Observatory/CSA of August 2014, «the
average lending term1 was 209 months (239 for
new build and 221 pre-existing)».
Credit
According to Banque de France data (Stat
First-time buyers ans works
PRICE PER SQUARE METER
MEDIAN FOR PRE-EXISTING FLATS
IN THE 2ND QUARTER OF 2014
Rennes
€2,320
0.2 %
Caen
€1,980
0.5 %
Performance over 1 year period:
1st April 2014 to 30 June 2014/1st April 2013 to 30 June 2013
Lille
€2,890
-5.9 %
Amiens
€2,020
-2.3 %
Rouen
€2,100
-9.4 %
Reims
€2,040
1.2 %
Tours
€2,140
-3.7 %
Strasbourg
€2,390
-5.1 %
Orléans
€2,010
0.3 %
Besançon
1 630 €
-1,9 %
Nantes
€2,580
0.8 %
Annual movement in
selling prices per m2
Under 0 %
0 % to 5 %
5 % and over
Limoges
€1,210
1.9 %
ClermontFerrand
€1,670
-2.7 %
Bordeaux
€3,110
7.7 %
French property
market report
Nîmes
€1,700
1.8 %
Lyon
€3,300
-0.4 %
Grenoble
€2,250
0.3 %
Nice
€3,640
2.2 %
Toulon
€2,140
-6.2 %
Toulouse
€2,450
-1.0 %
ns = not significant (the sales volume is insufficient to calculate relevant statistics)
Source: property databases from Notaires de France (the prices for Greater Paris are a valuation
of the NOTAIRES-INSEE indexes for the 2nd quarter of 2014).
N° 25 - OCTOBER2014
Dijon
€2,100
2.3%
Saint-Étienne
€1,020
-6.3 %
Poitiers
€1,320
-13.4 %
Saint-Denis
de La Réunion
€2,000
-9.5 %
Nancy
€1,860
-2.0 %
Paris
€8,120
-1.1 %
Montpellier
€2,530
-4.8 %
Marseille
€2,320
-0.3 %
Outlook: sluggish market sets in
In a context devoid of prospects of
improvement, notably for the short-term
economic and social picture, and where there
are no signs of tax relief, the trend is still rather
drab, with little cause for optimism.
The rate reduction is barely
compensating for the lack of spirit
among buyers.
Although the rate reduction is not managing to
motivate private investors, it is, nevertheless,
managing to maintain solvency among first
time buyers.
The recent rise in transfer duties in the majority
of French regions meanwhile, neutralises the
windfall effect of the historically-low lending
rate.
A leverage effect combining low rates and a
return to inflation making the cost of the loan
almost zero is not currently the most probable
short-term hypothesis.
Markets lifeless and lying in wait
For first-time buyers, the combination of high
prices requiring a longer lending period and
uncertainty about the future regarding the
continuity of their income to enable them
to repay the loan is making people hesitant
despite the low lending rate. One of the factors
which reveals this phenomenon is the rise in
the average period of ownership of a property.
Performance over 1 year period:
1st April 2014 to 30 June 2014/1st April 2013 to 30 June
The statistics for houses cover the whole urban area (town centre + suburbs)
Rouen
€165,000
-0.8 %
Tours
€201,900
-2.2 %
Lille
€174,900
1.7 %
Amiens
€156,000
5.4 %
Chartres
€197,000
3.1 %
Orléans
€185,000
-7.2 %
Châteauroux
€112,300
-6.5 %
Poitiers
€170,000
3.7 %
Limoges
€146,000
5.8 %
Nîmes
€195,000
-12.0 %
Bordeaux
€252,500
0.5 %
Reims
€211,000
5.5 %
Paris
Conurbation
€291,900
-3.3 %
Nantes
€238,000
-0.8 %
Under 0 %
0 % to 5 %
5 % and over
To conclude, we venture to say that the
measures in the Housing Market Stimulus
Programme will be such as to remove some
of the obstacles which are obstructing the
dynamic of the property market. It is to be
hoped that the government will apply these
measures imminently in order to see some
effects as soon as possible and put an end
to the inactivity among the actors in the
marketplace.
In this context, the gradual price erosion is
unlikely to show any respite. As a median price,
this fall should be more marked for defective
properties. For all types of property combined,
notaries are already finding that sellers need to
accept significant reductions if they want to sell
Brest
€165,000
1.6 %
Annual movement in
selling prices per m2
In terms of the type of properties, the
increasing trend of falling prices for preexisting unrenovated housing (particularly flats
and houses built until the 1980s) is likely to
continue as buyers now generally factor in:
- energy performance information;
- the high cost of co-ownership service
charges for many in this category of flats.
Mistrust in the future is therefore being sustained
by civil and fiscal legislative uncertainty, which
investors are finding frightening.
Le Havre
€161,500
-2.1 %
Saint-Denis
de La Réunion
€179,000
7.5 %
Therefore a large number of sellers who bought
between 2005 and 2011 are not recovering
their original purchase price when they sell.
On the investor side also, low rates are not
enough either to thwart prices which are
deemed to be too high and the constraints
imposed by the ALUR legislation. Tax benefits
are no longer on the agenda even though new
provisions, which must be welcomed, are
likely to be made (Housing Market Stimulus
Programme announced on 29 August 2014 by
the Prime Minister).
PRICE PER SQUARE METER
MEDIAN FOR PRE-EXISTING
HOUSES IN THE 2ND QUARTER
OF 2014
Angers
€178,500
-13.6 %
within a short timescale.
Troyes
€137,300
-11.6 %
Saint-Étienne
€189,000
7.4 %
Nancy
€160,000
-10.9 %
Dijon
€229,800
6.9 %
Lyon
€302,300
0.3 %
Grenoble
€295,000
-3.9 %
Toulon
€321,000
-9.4 %
Toulouse
€270,000
3.8 %
Montpellier
€310,000
3.3 %
ns = not significant (the sales volume is insufficient to calculate relevant statistics)
Source: property databases from Notaires de France (the prices for Greater Paris are a valuation of the
NOTAIRES-INSEE indexes for the 2nd quarter of 2014).
Marseille /
Aix-en-Provence
€306,900
3.5 %
French property
market report
N° 25 - OCTOBER 2014
The new PTZ terms from 1 October 2014 will help first-time buyers
Background
The PTZ+ is a government-assisted loan aimed
at consumers with income-restrictions who
wish to buy their first principal residence . The
Government pays the interest. Therefore for the
borrower it is an interest-free loan which has a
repayment deferral feature (the lender still requires
the borrower to have insurance however).
New features
The Housing Market Stimulus Programme (Plan
de relance du logement) announced by the Prime
Minister on 29 August, implemented in Decree
no.2014-1103 of 30 September 2014 on interestfree loans to finance first-time buyers, will alter
the conditions for deferring the repayment of the
PTZ+ in order to reduce the proportion of income
spent on housing by households and to open up
the Programme to the largest possible number of
people.
The government’s target is to distribute 80,000
PTZ+ per annum compared with the current
figure of 40,000.
The main changes relate to the financial terms of
the loan (maximum amount and the proportion
of the loan), the eligibility conditions of the loan
(maximum resources) and the conditions for its
(deferred) repayment.
In parallel the zoning used for the scales applicable
to buy-to-let, home ownership and intermediate
housing loans (PLI) was revised during August
to «reflect changes in the regional dynamics
and to adapt to the realities of the local property
market». The categorisation now differentiates the
conditions of access based on the demand for
housing in the location of the property. Zoning into
categories A, B and C expresses the tension of
the housing market by splitting the country into 5
areas - from the most strained (Abis) to the most
relaxed (C): if a person who wants to buy in zone
A finds it more difficult to find a low-cost property,
they will have easier access to the first-time buyer
subsidy than someone in zone C.
Around one hundred communities have been
reclassified into zone Abis and A. Locations such
Breakdown of the cost of buying a property
Cost of a property - pre-existing housing stock ¤176,000
as Lyon, Lille, Marseille and Montpellier have
moved from zone B1 to A; others such as Caen,
Le Havre and Dijon have been reclassified B2 and
B1.
Nevertheless the proportion of the loan in
zone A has fallen from 33 to 26%; the other
proportions remain unchanged, including for preexisting housing stock (sales of social housing to
occupants).
In addition the repayment conditions for the PTZ+
are set on the date of issue of the offer and are
based on location of the property (zone A, B1,
B2 and C) and the borrower’s resources. They
also reflect the repayment terms of the housing
loans granted for the same transaction. However,
they are now the same for both new and preexisting properties.
Definitions
Seasonally adjusted prices (SCP)
In the same way that the method used to calculate the indexes
makes it possible to strip out structural effects, the seasonal
corrections are intended to correct seasonal fluctuations. The
purpose is to ensure a fair comparison of trends between
two consecutive quarters without distorting the interpretation
by seasonal factors. For example, each year property
prices rise during the third quarter (particularly for houses)
due to the demand from families driven by the school year.
Notary's fee
10.8%
¤2,600
Banking fees
Median prices
7.2%
¤1,760
Transaction fee
56.3%
¤13,600
Tax
Agency fees
36.5%
45.5%
¤11,000
The Notaires-INSEE indexes are only available in geographical
regions in which the number of transactions is sufficiently high.
At more detailed levels, median prices are used. The median
price is the price that 50% of the e transactions have been
concluded at a lower price and the same amount at a higher
price. It represents the «midpoint» of the market, in a better
way than the average, as it is less affected by extreme values.
Notaires-INSEE indexes
¤8,800
The calculation method used for the Notaires-INSEE
indexes is based on econometric models which break
down the price of a property according to its main
characteristics (location, size, comfort etc.) in order to be
better able to avoid the influence of structural effects which
cause transaction prices to vary from quarter to quarter.
Total costs* €24,160
*Transaction fee (including taxation and notary's fee) plus agency and bank fees.
Find all the French property reports at www.notaires.fr
Contact : Andrée Sénès, Business Development Manager – Training and Development Department - Conseil supérieur
du notariat. Editorial committee: Didier Coiffard, Thierry Thomas, Andrée Sénès and Claude Taffin, Scientific Director,
DINAMIC. Published by: Conseil supérieur du notariat - 60 bd de La Tour-Maubourg -75007 Paris - Tel. +33 (0)1.44.90.30.00 www.notaires.fr - Design and creation: Bureau de Création - ISSN: 2100-241X. Page layout: Alexis Fressard - Communication
consultant
French property
N° 25 -OCTOBER 2014
market report