France property outlook

The French property market outlook is much rosier than one would expect given the recent stagnation that the sector has faced due to rising property prices. In fact, 2008 is gearing up to be a good year for French real estate.

One of the key reasons for this optimism is that property market in France is extremely attractive to expatriates – especially those of the British variety.

France is a great place for relocating as there are no restrictions on the foreign ownership of property. Furthermore the rules that regulate property purchase and resale largely depend on the type of property involved and the area where it is located.

The French property market seems to be stabilizing lately despite the fact that interest rates on mortgages have risen and real estate prices continue to remain high. Another factor in favour of the France property market having a good year is that the real estate sector is not likely to face the same kind of mortgage owes that is currently creating such havoc in the United States. As French lending practices are far stricter than in other countries, only those who can really afford to maintain and finance a mortgage are able to borrow the funds to purchase property. So, although it is harder to obtain a mortgage in France, those who do can definitely afford to make their payments.

Another reason that the France property market has a rosy future is that President Sarkozy wants to turn France into a nation of homeowners. At present only 57% of the population own property. In order to stimulate real estate growth he is introducing a number of economic and tax reforms such as extending the 35-hour work week and significantly reducing the amount of inheritance tax paid. He is considering allowing mortgage interest payments on a person’s main home to be offset against their taxes and he is considering a move away from direct taxation – such as income tax; instead he is considering a Value Added Tax and an environmental tax.

All of the above-mentioned moves are aimed at stimulating property demand in the long term. Should the measures work, it would mean increases across the board.

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