The juxtaposition of France with its easy access to the UK, Belgium, Germany, and the Netherlands has always made it a popular vacation destination for Europeans. This is proving to be particularly relevant this year as airlines struggle to accelerate their recovery from the pandemic and are cancelling thousands of flights right across the summer months and thereby threatening many long-anticipated and much-needed holiday breaks. The fact that you can get into France by car with ease is a big bonus and we are seeing a lot of last-minute accommodation bookings for our clients who run B&B and gîte businesses.
The desire to have a vacation home or even relocate to the region is still in the minds of many. Last year's demand outstripped supply and as a result property prices, particularly for those with lots of character located in rural areas (the focus for France4U) saw a dramatic 20% rise. This has now stabilized and with escalating fears of a recession in the UK and some other European countries, we think that the position will reverse, and that supply will exceed demand, which of course is good news for the buyer, with more choice and a chance to negotiate.
Not helping the situation though is that loan-to-value ratios have reduced; 12-18 months ago it was possible to get a 100% mortgage, and now this figure stands at 80%. And of course, interest rates are now rising quite significantly with the European Central Bank hinting that there is more to come in terms of lending rate hikes.
So, the question is whether we are seeing the end of the housing boom. We think that there will be a significant slowdown and that sellers should expect a longer sales process time and respect the need to be open to negotiation.
For buyers, interest rates remain historically low at 2.5% (ish) and, for UK buyers, the British Pound is still relatively strong against the Euro and delivers almost 20% extra buying power. Couple that with the fact that rural property is traditionally cheaper in France than it is in the UK, and we think there are still opportunities to secure a great deal.
Putting that in context, at France4U we are still experiencing quick sales as currently overall housing stock remains depleted. We see the ratio of non-French buyers increasing significantly as a good number of these buyers have either the means to raise money quickly or already have the cash in hand and are eager to secure a home in the region.
Our strength in attracting a large and varied buying audience gives us confidence that we will still be able to find clients for all types of character property in rural France. And remember, we are only a phone call away if you would like to discuss your ideas and aspirations with us. Of course, we would prefer to see you and show you some of the fine properties we have for sale, including our featured property in this edition of the newsletter, so read on.
As always, we wish you happy Summer and we hope to see you soon.
Be well, and be safe and happy!