Property Prices in France – No Soft Landing says FNAIM

French property prices have come down to earth with a bang, according a number of professional bodies, including the French National Federation of Real Estate Agents (Fédération Nationale de l’Immobilier  or FNAIM)

The number of sales transactions in 2008, fell by 20% compared to 2007, and the decline is continuing through 2009. 746,400 sales were concluded last year, against 929,300 in 2007, according to figures released yesterday by the Superior Council of notariat (CSN). The number of transactions in January and February 2009 fell 37% compared to the same period in 2008.

All market segments saw a drop in prices and transaction volumes. In Paris sales in January 2009 fell by 47% compared to the same month 2008.  Prices fell 9.8% across the country on average and FNAIM expects this to continue through the year. New builds showed an even bigger decline in volumes – dropping a whopping 37.6% compared to last year.

Many of the larger cities show declines in excess of 10%, including Aix-en-Provence, Cannes and Grenoble. We have been watching property prices on the Cote D’Azur drop for some time now, with hastily re-written prices in many agent’s windows. Prices on the french Riviera fell over 40% during the last recession, and we certainly expect this one to be worse.

French property prices on the way down

It’s far from the “soft landing” the FNAIM have been predicting for the last 18 months when the market began to show signs of slowing after ten years of increases.  Between 1997 and 2007, prices of houses and apartments have more than doubled, pricing much of the country out of the market. But, what goes up must come down and the French bubble has burst, turning into a very hard landing. According to the chairman of NSC, Mr. Jean-Pierre Ferret “To the point of jeopardizing the economic stability of certain notaries offices whose equilibrium is based on the number of property sales.”

Loosely translated, this means Notaires are going broke.  Approximately 1,000 jobs were lost in the Notaires surveyed (50 000 employees and 4 500 notaires). Notaries are resorting to “situational loans and loans of cash” to survive.

Estate agents are reporting a decrease in turnover of 30% on average in early 2009 compared to 2008, according to a survey by the FNAIM , to which 480 members responded. Staff has been reduced by 11%, sales prices are down by 25% during the first two months of 2009 compared to the same period in 2008.

Properties are now sitting unsold for 5 months compared to 3 months in 2008 and a third of estate agents have moved into the rental arena in search of more income. 51% of sellers “are open to renegotiate a lower price” for their property, said René Pallincourt, President of FNAIM, as reality sets in.

As usual, the FNAIM do their best to confuse the issue by using staggeringly difficult to understand methods of data analysis in an effort to disguise the true state of the market. The barely-understandable  FNAIM report is available here – PDF down load (French only)