Hints & Tips for Buying in France #3 - Pay the right price!
Ok, so you have this dream to buy a place in France where you can bring up your young family and enjoy a quality of life which is not available to you in the UK - right? Well, despite what people may say about there being a price differential between the UK and France this gap has come down in recent years. There has been a bit of a property boom in France, due to both French and English (and Dutch and other nationalities) pushing up prices in a desperate attempt to get on the (2nd home) ladder.
Whether this continues or not is up for debate. What is for sure, though, is that buying a home in France is not as cheap as it was a few years ago. The cost of buying, in terms of taxes and other fees, is still quite high, despite having come down in recent years. This additional cost is so often not taken into account when comparing prices. We grumble about the cost of stamp duty, but this pales into insignificance when compared with french buying costs.
I'm a firm believer that prices revert to the mean over time. So, I look at a graph of, say, prices over the past 40 years, then draw a trend line through the graph. If current prices are above this line then I suspect that prices may fall in the medium term. If the current prices are below this trend line then I suspect they may rise in years to come.
So, my advice would be:
1. Don't rush into an inappopriate purchase - don't buy at the top of the market just because everyone tells you it's the thing to do!
2. Negotiate with the owner - they know that buyers are desperate to 'own the lifestyle' and can be very optimistic when it comes to pricing their properties
3. Remember to add the purchase fees - it's not unusual for this to add 15%-20% to your purchase price
Whether this continues or not is up for debate. What is for sure, though, is that buying a home in France is not as cheap as it was a few years ago. The cost of buying, in terms of taxes and other fees, is still quite high, despite having come down in recent years. This additional cost is so often not taken into account when comparing prices. We grumble about the cost of stamp duty, but this pales into insignificance when compared with french buying costs.
I'm a firm believer that prices revert to the mean over time. So, I look at a graph of, say, prices over the past 40 years, then draw a trend line through the graph. If current prices are above this line then I suspect that prices may fall in the medium term. If the current prices are below this trend line then I suspect they may rise in years to come.
So, my advice would be:
1. Don't rush into an inappopriate purchase - don't buy at the top of the market just because everyone tells you it's the thing to do!
2. Negotiate with the owner - they know that buyers are desperate to 'own the lifestyle' and can be very optimistic when it comes to pricing their properties
3. Remember to add the purchase fees - it's not unusual for this to add 15%-20% to your purchase price
posted by The Boss @ 12:32 PM
3 Comments:
At 10:51 PM,
Anonymous said…
It is absolutely true that prices in France have risen substantially in recent years. In the year to date (end-November, 2006) prices have gone up an average of 7.3%. Since the begining of 2000, prices are almost exactly doubled (up 100%).
In addition to the costs of the house, there are the extra costs (estate agent fees, taxes, notaire fees) that can add substantially. Check these before buying. The taxes and notaire fees are fixed by law, so the estate agent should be able to tell you exactly how much these are for a given property (but confirm with a notaire before signing anything).
The estate agent fees are not set by law. Usually they are paid by the seller, but sometimes the contract specifies they are to be paid by the buyer or split between buyer and seller. These fees are far higher than in the UK, so this is an important point to check (and perhaps negotiate).
As in the UK, house prices are almost always subject to negotiation. In some cases this can be quite substantial (we negotiated 27% off our own house purchase). It is best to look at a number of similar houses in the area to get a general feel for prices, before commmitting to any given one.
House prices also vary greatly by region (e.g. Provence and Paris are the most expensive) and local attractions (e.g. very close to a beach is more expensive than half an hour's drive away).
There are still many good deals to be had in France. However, careful investigation and taking your time will normally be well rewarded.
At 2:42 PM,
River Cottage said…
Hi, I purchased a cottage near Bourganeuf in the Creuse region of Limousin. Anyone thinking of house hunting in this area I can offer a discount on weekly bookings.
Drop me a line for further info at,
rivercottagegite@yahoo.fr
Regards
Richard
At 12:51 PM,
Anonymous said…
This is good advice. We at property in france believe that prices this year may fall a little. In the South West, prices need to come down by around 5% if the balance of supply and demand is to be re-addressed. That being said, some properties particularly those in the lower mid-range segment around major cities will fair better and may even increase a little.
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