A year ago we made the following predictions about market trends in 2009 for “premium properties” in France – upscale Paris apartments and country properties in sought-after regions that attract foreign buyers. We predicted that:

With asking prices for premium properties in Paris having stabilized in the closing months of 2008, sale prices would not fall substantially in 2009.
Prices for premium properties in Provence, the Côte d'Azur and other sought-after regions would soften, but would not show any dramatic downturn in 2009.
While top-drawer properties would not sell at fire-sale prices, the first six months of 2009 would be a buyer’s market with exceptional opportunities for buyers willing to step up with bold offers.
Despite the depressed market at the beginning of 2009, premium properties in all sectors would continue to sell, though less rapidly.
Some owners of prime properties would sell at substantially reduced prices, while others would simply hold their price and wait for the market to rebound.

How did we do?

Overall, we think real estate professionals in France would give us a B+, as these predictions turned out to be generally true.

In Paris premium properties in premium central arrondissements fulfilled their historical mandate and continued to sell briskly, without any substantial falloff in price. Sales in Provence, the Côte d’Azur and other prime regions were sluggish, and while prices did not rise, they did not plunge.

Taking advantage of the buyer’s market in the first part of the year, many buyers made bold offers and got great deals. In other cases owners declined substantial price reductions or simply withdrew their properties from sale, waiting for the storm to pass.

Where did we go wrong? We predicted prices would start to rise in the early summer of 2009. We were off by a few months. According to the French real estate association, prices turned the corner in October, and continued to rise through the end of the year. Based on our own experience, we believe that trend may have started earlier in Paris.

In sum, French realtors complained plenty in 2009, but according to our many partners who deal in premium properties, the champagne still flowed New Year’s Eve. And they look forward to a good 2010. Smart buyers should also look forward to 2010 – if they don’t delay. This is especially true for smart American buyers, who recently have seen a welcome rise in the dollar.

MARKET TRENDS: 2010

The real estate market in France is now rebounding. While bargains remain, prices have resumed their ascent, though at a far lower rate than during the bonanza years before 2008. Thus French property remains a prime target for buyers seeking the ultimate prize - a residence in France, with all that implies for an enriched lifestyle, that is also a sound investment that can be acquired at a fair price.

Below are highlights we gathered recently from reports by FNAIM, an association of French realtors, and other professional sources in France.

From a buyer’s viewpoint, these highlights point to one conclusion: the window of opportunity, which opened when French property prices began to fall in 2008, is now closing.

The overall resuscitation of the French real estate market is most evident in Paris, where prices of quality apartments in central arrondissements generally withstood the downward trend seen in outlying arrondissements and in the French countryside.

Meanwhile French banks are lending more liberally, and at rates that are among the lowest in years.

The highlights:

In 2008 and early 2009 prices fell until stabilizing in the second and third quarters of 2009. According to FNAIM, prices started to rise slightly in October, when they went up about a half percent above the previous month, a trend repeated in November.
While prices for all properties (not just premium properties) in France posted a loss in 2009 as compared to the previous year, the overall decrease was limited to 4.4% because of gains in the last quarter of the year.
Price gains were particularly noticeable in apartments as compared to stand-alone housing.
Buyers who made very low offers generally saw those offers refused. However, offers of 5 to 10 percent below asking price, which exceeds the customary margin in France of 3 to 5 percent, were often accepted.
Sellers that we described in our 2009 report as being in “la-la land” have been chastened by seeing their properties sit on the market unsold. These sellers have become more realistic in setting their prices, and realtors generally believe that in most markets prices are now correct. As a result, buyers have fewer opportunities to negotiate substantial reductions from asking price. On the other hand, prices are more likely now to reflect a property’s true value.
During the crisis many sellers of high-quality properties withdrew their properties from sale until market conditions improved, thus reducing inventory of properties that appeal to foreign buyers seeking a second home in France. Attracted by a more buoyant market, many of those sellers are likely to reoffer their properties in 2010.

Paris

Prices for quality apartments continue to rise, though not as sharply as before 2008.
Among foreign buyers, the most sought-after property continues to be a well-renovated apartment in a prestigious quartier.
Demand for quality apartments far outstrips supply, particularly in the petits arrondissements (1 through 8) of central Paris. As noted in the October 2009 issue of the magazine Votre Argent, in these quartiers new offerings are rare and prices have remained stable or resumed their usual ascent.
The St.-Germain quartier of the 6th arrondissement remains the most expensive real estate in Paris. According to an agent who deals in prestige properties, in the 6th one can expect to pay "10,000 to 12,000 € a square meter for a classic apartment, up to 15,000 € for a very beautiful classic apartment, and for the exceptionally beautiful apartment – the sky’s the limit.”
The 7th arrondissement remains exceedingly popular with foreign buyers. Apartments needing work are selling in the vicinity of 9,500 €/ m2 in the Gros Caillou quartier, while in general prices easily exceed 10,000 €/m2 for good-quality apartments anywhere in the arrondissement. Count on paying between 17,000 and 20,000 €/ m2 for a stunning apartment with a view on Champs de Mars or the Seine.

Provence

While sales slowed considerably in 2009, prices of quality homes in prestige markets generally remained stable as sellers refused low offers and decided to wait until normal market conditions returned. Realtors report a good inventory of quality vacation homes for sale. Sellers are willing to negotiate, but fire-sale offers are rarely successful.

Cote d’Azur

In general the real estate market on the Riviera remains quite active. Thanks largely to the departure of Russian buyers; however, there has been more turnover in lower-priced homes than in luxury villas.

Financing

Banks that severely tightened lending requirements in 2008 began in the latter part of 2009 to ease restrictions on borrowing, which in turn has spurred home sales.

Mortgage rates have fallen and stabilized at the lowest level in years. Major lenders are now offering well-rated borrowers rates as low as 4% on a 15-year fixed loan with 20% down - a full point lower than a year ago.

We also invite you to read previously written trend reports and related articles:

Click here

Click here for previous Just France Sales report on Fall 2008 market trends.

Click here for previous Just France Sales report on spring 2008 market trends.

Click here for 2006-2007 Paris price charts per arrondissement.

Click here for Previous Just France Sales reports on 2006-2007 market trends

Click here for previous articles on foreign investment in French real estate

Click here for Just France Sales' tips to buyers

Click here for tips on how to send mortgages and other payments to France