House Prices In France Resist In Final Quarter

Over the year house prices fell by an average of 5.6% (flats by 4.2%), well below the anticipated fall of around 10% expected by most pundits.

This analysis of a single digit average fall in prices for 2009 is broadly shared by most other observers of the market, including the notaires and the major national agents who each do their own regular analysis of the market.

The 10% fall in house prices can only be discerned over the past two years, while flats have fallen by 5.4% over the same period, according to FNAIM.

After two successive years of a fall in prices, they are now at a level where they were at the end of 2005.

Given the spectacular rise in prices of 140% between 1997 and 2007, FNAIM argue that ‘the bubble has not exploded, it has just begun to deflate gradually.’

FNAIM consider that cheap credit and a rise in household incomes over the past decade has contributed in controlling the fall in prices, although they acknowledge that ‘those with the most modest incomes’ have been driven out of the market.

This point gets greatest confirmation in a recent report from the Observatoire du crédit logement, who noted that buying a property required on average 3.2 years of income in 2001, against more than 4.3 in 2009.

This may well be one reason why it was a very quiet year for actual sales, with only around 550,000 sales for the full year, a fall of 21% over 2008, down to a level not seen for the best part of a decade.