Low mortgage rates keep French housing market fluent

While in most countries in the Eurozone the growth of house prices is cooling down, France keeps its spirit of “indépendance”.

Past years brought a significant drop in property prices in France by 5.5% in 2012-2015 years. The recovery came with a total increase of 9% overall and 12% in Paris. In 2017 and 2018 a rise of 3% each year.
One of the major reasons for such growth has been low-interest rates on mortgage in the country. Such conditions provide support to the market by decreasing the number of exceptional transactions. Besides, large cities keep to an overall trend of steady demand for real estate so housing prices are projected to grow in the upcoming future. However, there is one noteworthy factor that will tip the price scale. Periods of “gilets jaunes” are still a disturbing factor for those who consider becoming a house owner in France, especially for the foreign customers. On the other hand, this crisis has lost its immediacy and became relatively less active especially regarding the interest rates. Therefore, specialists are prone to conclude that the prices for real estate in France will continue to grow during throughout 2019.

Eurozone

When looking at the trends in prices for real estate in Eurozone you can easily spot a growing progression. However, a new year introduced changes with slower housing price increase of 3.1% compared to earlier 3.8% in most European countries. According to ING’s ‘Eurozone Quarterly’ robust activities in the construction sector in Germany elevated prices for residential property by 5% in 2018. Nevertheless, the fact that German economics goes through a stalling phase will certainly have an impact on the market. Spain, in its turn, displayed a decent growth in prices in the third quarter of 2018 and year-over-year growth of house cost had hit 7.3%. It was the highest price point since the Eurozone crisis. Despite that in the first half of 2018 the housing prices were growing at a slow rate. Experts believe that Spanish economics still won’t show a recovering growth even in the light of the country’s plummeting unemployment level. As a result, the price growth is expected to drop to 5.5% in 2019. Spain’s western neighbour Portugal showed similar results. In the first quarter of 2018, strong demand from external clients as well as economic growth boosted the housing prices to their peak of 13%. Yet, 2019 will definitely show downfall in residential property cost akin to 12.6% in 2Q18 and 9.2% in 3Q18. Such a forecast takes ground in the lost momentum in the domestic labour market and lowering demand on real estate from foreign buyers.

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