Francois Hollande’s austerity measures are biting as the French property market looks likely to suffer in the battle to reduce the country’s deficit.
The national federation for estate agents (FNAIM) has announced that property prices are expected to fall by 2% this year as the market continues to feel the effects of rising taxes and economic pessimism.
2012 saw price growth slow to a statistically insignificant rise of 0.8% across the nation as tax changes came into effect. As well as raising capital gains tax, President Hollande has taken measures to tighten up tax reductions for buy-to-let investments.
With an increase in taxes levied on properties and rent-capping regulations being considered, potential investors are becoming increasingly cautious about investing in French property.
Paris, one of the most iconic capital cities in the world and traditionally a safe bet for those looking for a good return on a property investment, has seen the average price of existing apartments fall by 2% in the fourth quarter of 2012 compared to the previous three months.
In the rest of the country, Picardie, Alsace, Centre, Nord Pas de Calais, Lorraine, the Midi Pyrenees and Pays de la Loire and all saw prices fall for both houses and apartments.
Some of the worst decreases were in traditionally popular areas such as Brittany, where house prices dropped by an alarming 6.4% and apartment prices by 2.95%.
The depressed outlook for the property market is only adding to the President’s woes, with the most recent statistics showing that his approval figures with the French electorate have fallen to an all-time low of 30% after his first 10 months in office.
If you are thinking of investing in France, whether it is for a property deal or another transaction, be sure to compare the market before you buy your overseas currency.