French property prices have failed to rebound since the start of la crise, while the political uncertainties of François Hollande’s government coupled with the current whiff of scandal surrounding the president are doing little to aid recovery.
A lethal combination of timid buyers and intractable sellers means prices rose just 0.8 per cent in 2012, according to the French Real Estate Federation (FNAIM). In 2013, amid rising unemployment and concerns over tax hikes for high earners, FNAIM reported a 2.9 per cent fall.
There is, however, one bright spot in the French property market. International buyers, who have been propping up prices in central London since 2010, are now casting their eyes across the English Channel.
In Île-de-France, the region which includes Paris, prices are up 6.7 per cent compared with 2007, according to FNAIM. In the adjacent Nord-Pas-de-Calais regions prices have increased 3.7 per cent. Top-end property values in Paris, meanwhile, are up 14 per cent since 2008, according to a study by Investment Property Databank.
Susie Hollands, founder of property agency Vingt Paris, believes that the price rise is thanks to an influx of overseas buyers. “Many wealthy people have left France,” she says. “That has stimulated a flood of interest because there are heritage properties coming on to the market which have never been sold before. I also think that Paris is the type of place which never goes out of fashion. Paris is undervalued compared to prime central London and I am starting to have investors say they are priced out of London.”
This kind of premier property includes a nine-bedroom apartment in the 16th arrondissement, with views of the Eiffel Tower, on the market with Knight Frank for €26m.
Outside Paris, even in prime coastal and rural areas, the picture is very different. Mark Harvey, head of Knight Frank’s French network, covers Dordogne, Provence and Gascony and estimates that prices are down 25 per cent compared with the peak.
Harvey says the region is heavily reliant on second-home buyers from the UK, Belgium, the Netherlands and Switzerland. These buyers are still around, but their budgets have shrunk from the €2m to €3m they would have spent pre-recession. “They don’t need to do that any more when they can buy a fabulous 300 to 400 sq metre petit château with perhaps 10 acres of land for €1m,” says Harvey.
In the Loire Valley, for instance, Savills is selling a 16th-century, six-bedroom manor house with 15 acres in Baugé-et-Anjou for €990,000.
In Provence-Alpes-Côte d’Azur, which takes in the prime stretch of coast from Nice to Marseille, prices were 1.4 per cent down year on year at the end of 2013. However, values are still 2.4 per cent above 2007 levels.
Jean-Claude Caputo, chief executive of Savills’ French Riviera division, hopes that recent changes in capital gains tax (CGT) will help to boost the region’s property market. From September last year EU passport holders with a property in France will pay a reduced rate of CGT (which at present is 40.5 per cent) each year that they own the property. The reductions start once a property has been owned for three years. The system is the same for non-EU owners, except they start from a higher CGT rate of 53 per cent. And, until August this year, owners have been offered a 25 per cent CGT break aimed at stimulating further transactions.
The strategy, says Caputo, is encouraging more stock on to the market. In Antibes a three-bedroom villa is on sale through estate agents Engel & Völkers at €13m. The 360 sq metre villa has sea views and comes with a two-bedroom guest cottage.
Caputo sees a divide in the region, with the most chic resorts – Saint-Tropez, Saint-Jean-Cap-Ferrat and Valbonne – attracting overseas buyers. Those from Russia, Ukraine and Kazakhstan dominate sales above €10m, with Swiss, Belgian and, increasingly, British buyers purchasing the less expensive properties.
However, in “secondary locations” such as Sainte-Maxime and Èze, which are more reliant on domestic buyers, he expects prices to fall.
“If owners in these areas are not reasonable with their prices they will not find buyers,” says Caputo. “The problem is that some owners are in no hurry to sell and they are not willing to put their prices down.”
While international buyers can, up to a point, buttress the top end of the market, experts agree that France’s continuing economic and political travails will have a prolonged negative impact on the mainstream property market.
In November last year Standard & Poor’s, the rating agency, downgraded France for the second time in two years, and the country’s unemployment rate is currently 11 per cent.
President Hollande’s high tax policy, with levies for those who earn more than €1m annually due to be hiked to 75 per cent this year, has already driven some wealthy nationals (including the actor Gérard Depardieu) out of the country.
Harvey says high business taxes, a lack of credit, a lack of investment in capital projects and unemployment are also impacting on property sales. All this means that Hollande is struggling to inspire public confidence. Earlier this month, a You Gov poll found his approval rating was running at just 22 per cent.
Alexander Kraft, chairman of Sotheby’s International Realty in France, believes that vendors are starting to accept reality and may be ready to drop their prices to more realistic levels. “This could lead to short-term price falls,” he says. “But increased activity in the market could, by the end of 2014, start to translate into price rises.”
Where: About 20km inland from the south coast, half an hour from Nice airport, and five minutes from the towns of Opio and Valbonne.
What: An 18th-century, four-bedroom, former monastic farm set in 2.8 acres, with staff cottage.
Why: An elevated position affords views of the sea on one direction and mountains on the other. A great double-aspect living room with vaulted windows.
Who: Unique Living, uniqueliving.com, +44 20 7148 6480
Where: Chic resort at the eastern end of the Three Valleys, the world’s largest connected ski region.
What: A five-bedroom chalet in Courchevel 1850, the highest part of the ski domain.
Why: Step out of the chalet and straight on to the slopes (the Pralong lift is seconds away), then recover from a hard day’s skiing by relaxing in the hammam or pool. There is also a wine cellar.
Who: Knight Frank, knightfrank.com, +44 20 3641 5161
Where: A tiny village in the south of France, ten minutes’ drive from the medieval village of Valbonne, half an hour from the city of Antibes, and 12km from the nearest beach.
What: A newly renovated, five-bedroom stone farmhouse set in three acres of gardens, with a self-contained guest apartment.
Why: Well-designed gardens featuring olive trees, fruit trees and flowering Provencal shrubs. Hidden in the greenery is a swimming pool with a summer kitchen and pool house.
Who: Home Hunts, home-hunts.com, +44 20 8144 5501
Where: A small rural town in Aquitaine, southwest France, 72 miles from Toulouse.
What: A 13th-century Gascon château, a style peculiar to the region and built as a low tower with a rectangular footprint. Gascon châteaux were originally used as watchtowers or signal towers. This five-bedroom example is set in five acres and has a guest cottage and swimming pool.
Why: Fabulous 360-degree views of open countryside from the ramparts. The property also has an attic that is ripe for conversion.
Who: Savills, savills.co.uk, +44 20 3641 2598
Where: In vineyard country between the river Dropt and the hills of the Périgord region, between Toulouse and Bordeaux in southwest France.
What: A Grade I-listed, eight-bedroom château, the oldest parts of which date from the 12th century. The property is set in about nine acres, with a lake, a pool and a variety of outbuildings.
Why: Original features include 500-year-old fireplaces, terracotta floors and vaulted ceilings.
Who: Leggett Prestige, leggettprestige.com, +33 553 566 254
Where: Southern France close to the university city of Montpellier and 12km from the coast.
What: A 19th-century château at the heart of a 215-acre estate, with 30 acres of vineyards and 87 acres of organic farmland. There are also two self-contained apartments and staff quarters.
Why: A hugely imposing property and a well-established viniculture business.
Who: Home Hunts, home-hunts.com, +44 20 8144 5501