Friday, May 03, 2013

So what's going on with the Charente property market?

I'm fed up of reading stories in the press about French house prices.

Market commentators tend to speak in such generalisations that the conversations are meaningless.  It's the same in the UK of course - try telling someone in Burnley that their market bears any relation at all to that of London & the south east.

So if the notaires or FNAIM feel that prices are going to fall by between 2-5% this year then good for them.

What is of far more importance to my clients and I is the gap between "sticker price" (what you'll see a house for in an agents window) and "selling price" (what it actually sells for).  Other than keeping your ear to the ground and relying on local gossip then these stats are impossible to come by.

I'm not going to give away any client secrets here but certainly the deals we have been striking have seen a pretty big gap between the two.  Indeed I wrote an article on pretty much this subject in the last issue of FrenchEntrée magazine.  I have copied the article below in its entirety as I think it's an important issue....far more important than whether prices across the country have gone up or down a point or two!

Mind the gap....
Oh the memories.....for over twenty years I had to put up with the commute into central London from my suburban house in Surrey.  I'd catch the 7.06am train before jumping onto the tube at Waterloo, then whilst at Savills I'd get off at Green Park and whilst with Chesterton I'd get off at Oxford Circus.  From waiting around in the freezing cold for trains that never came to being jammed into an underground carriage in the heat of summer I have plenty of memories to keep me going whilst I laze around in the Charente sunshine.
One phrase stands out above all, every morning I would be popped out of the crowded carriage and be greeted with "please mind the gap".
I hadn't heard these words for a long time but this year they seem to be a daily occurence again....just used in a different context.
You see 2013 is going to be another difficult year for the French property market.  When I moved to France around 10 years ago there were around 850,000 property sales pa, last year there were around 650,000. Michel Mouillart, the Head of Economics at the Paris-Nanterre University, was quoted recently as saying that around 3,000 estate agencies have had to shut up shop with 10,000 agents losing their jobs.
Of course the current economic woes aren't just confined to the French market, indeed it remains one of the most robust in Europe and we should be grateful that we've had what analysts like to call a "slight correction" rather than the decimation seen in say Ireland or Spain.
My point though is that it's a buyers market and investors with cash in their pocket know it.
This leads me back to "mind the gap" - you see there is now a definite gap between what vendors think their properties are worth and what buyers are prepared to pay for it.  This gap is the main reason for falling transaction numbers and until it is closed we will continue to see a flat market. 
Those people selling their homes in 2013 will be the ones who have priced their houses realistically.  They in turn will then probably become a buyer themselves and will find themselves in a position of strength.  The old mentality of "well, we paid €200,000 then spent another €50,000 so we'll put it on the market for €300,000 as you always make money when you sell houses" simply won't wash.
If this is your thinking then I'm afraid you're going to have a long wait before selling it unless you are extremely lucky or bought it at a particularly bargain price.....and don't forget that we all think we are getting a bargain when we buy a house but the reality can often be different in a country where getting comparable evidence on house prices can be so difficult.
As a buying agent I'm mandated by international buyers to find them a house and then to negotiate the lowest possible price.  It used to be that I would be holding clients back when it came to the purchase price but it's noticeable now that when issuing the mandate they all tell me that they have no intention of paying "window price" and that we will be using my research to strike a hard bargain.
Mind the gap!

1 comment:

Rebecca Russell said...

Good post Graham. Very much agree. Here on the Côte d'Azur the market is busy but still there is a gap between reality and (often) unrealistic expectations on the part of the sellers.