Will French property prices keep on rising?

French property prices over the last year until the month of October 2005 averaged an increase of 11.4% (Source FNAIM 2005). This is in contrast to the previous year which reached over 15% as a national average- so is the French housing market slowing down?

Figures show that in November 2005 the price of apartments rose by 0.3% while the price of houses by a more sturdy 1%, averaging out at 0.5% in total for the month. This has been the trend since January 2005 as apartments have increased in price by a slower rate than houses and seems to be re-adjusting to the much higher growth rates they were accustomed to from 2002 to 2004. Data shows that between 2002 and 2004 apartments rose by between 12% and 17.8% each year while houses by a more moderate 8.4% to 12.5% a year, hence the readjustment seems logical. Smart investing however is all about examining specific locations and not looking at a country as a whole. For instance statistics from FNAIM show that in 2005 prices in Bordeaux rose by 15%, Toulouse by 18% and Nantes by 22%- all on the west and South West coasts of France while Paris recorded just 6% growth in 2005 as it was the slowest mover. These price rises in the south-West look set to continue as percentage prices still haven't risen by nearly as much as they have in Paris and so still have plenty of room for strong growth.
It is also interesting to note that these price rises have often been in the less sought after areas of cities such as Bordeaux, Lyon and Paris. “Capital” the French investment specialists have seen that in Bordeaux, the common areas of la Bastide prices are catching up with those in the sought after area of the “Rive gauche”. So does this mean that you should be snapping up as much property as you can in the less prestigious areas of French cities? Probably not as it is quite normal that during boom periods less sought after property can increase in value very sharply and it is also true that they will also be the first to drop in value if the French economy stumbles upon hard times. The fact is that even in a slow housing market prestigious, well located properties will always sell whereas others may not and even though price rises now might persuade you to buy in a cheaper area, in the long term the price gap between the two is likely to revert back to normal.

Therefore the advice is to choose your location and property type wisely and find out about local property trends before your purchase and the rewards are there for the taking.