Property Investment in France :: FNAIM Hedges Their Bets
The recent FNAIM "state of the market" report is at best obtuse, and at worst a deliberate attempt to obscure the facts. As usual - no sales volumes are included in the report, but the tone suggests some panic amongst the membership. The report claims "slight upward pressure on prices in the short term," but then states that prices fell 1.4% in the first quarter 2010.
The French government subsidies for new home purchases has no doubt please Mr Sarkozy's buddies in the construction industry, but a dearth of sales in used property is causing the entire market to become skewed and unusually, the FNAIM attacked the government statistics saying they "always gives way to the rumors and accusations based on the benefit of political interests ."
Which is rich coming from the FNAIM. Either way - the almost complete lack of sales in certain sectors and markets makes it very difficult to ascertain of predict where prices are going. Recent reports that European banks are still hiding losses do not bode well for anyone. The Bank of International Settlements annual report suggests more pain in the markets.
Banks remain highly leveraged and still appear to be on life support. The essential task of reducing leverage and repairing balance sheets is simply not finished. The Greek sovereign debt crisis shows just how fragile the financial system still is.
Losses on European bank balance sheets are expected to mount over the next few years. Some banks are rolling over existing loans rather than inducing foreclosures, thus delaying loss recognition.
No changes there then and still the full extent of the financial crisis in Europe is being covered up, and until it becomes more clear, buying investment properties remains risky and hard to find credit for. We expect downward pressure on all asset values and at some point - the banks must take action against their delinquent mortgagees, which are substantial across the continent. The used market is frozen solid, traditional inland Brit enclaves in the Dordogne etc are completely static despite falls of 30-40%; the luxury market has seen almost no activity. Something has to give at some point.
Property prices in France
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