How The Property Market Has Performed In 2007

Since 2004 France has seen the growth in property prices slow from an impressive 15.4% p.a to 4.7% p.a in 2007 (source FNAIM). However when you look at specific locations the story is different. Limoges for instance in Limousin saw price increases of 11.3% in 2007 while Cannes achieved 8.2% and Nice 9.1% Therefore if you consider the location and micro-location rather than the country as a whole you will see that healthy profits have been made by the savvier investors. Region that has not performed so well though on the whole is the South West which saw only 0.2% growth in 2007 although again even here there will be locations which did well.

If you invested in France just recently and expected to make a quick buck overnight and get out then depending on where you invested this news won't exactly be music to your ears. You have nothing to worry about though as long as you were correctly advised to view property as a minimum 5 year investment. In areas where we are seeing slow capital appreciation the market is in fact showing a sharp increase in rental prices instead. Paris for instance which experienced house price growth of 4.7% actually saw rental income increase by 4.6% bringing average yields across the city to 4.5%. This often happens in a slow property market as demand for rental property increases and gives a chance for rentals to catch up with house price growth. Therefore if you are a landlord who bought diligently you will actually be reaping the rewards now of steadily increasing yields and a property in high rental demand.

For those looking to invest now it is an excellent time to buy as it is such a good buyer's market. Euro interest rates are at 4% currently which although are the highest since 2004 are expected to fall in 2008 and in any case are not so high as to cause repossesions. Mortgage products are also becoming increasingly flexible and competitive and many banks are in fact now offering 30 year mortgages and up to 100% finance which should help investors. Up till now offers on house prices had always been fairly close to the asking price but now we are seeing offers of 10% to 15% below it. If you couple this with the agency margins being squeezed the result is some rather juicy deals out there waiting for the savvy investor.