Property price drop puts France
New figures suggest that France has emerged relatively unscathed from the short disruption in property sales where overseas investors are concerned.
Knight Frank’s Global Property Search website has recorded a 19% increase in French property searches in the first two months of 2013 compared to the same period the previous year.
Following the country’s announcement that property sales and ownerships taxes were likely to undergo a change, particularly for premium real estate, sales experienced a noticeable fall in demand for prime property there.
However, it seems buyers are beginning to flock back to France, with the number of French sales completed by Knight Frank in the 12 months to March 2013 rising by over 20% compared to the corresponding period a year earlier.
Uncertainty regarding potential tax changes announced in the second half of 2012 caused sales to slip but also sparked a drop in prices, with these new deals luring foreign property investors back to the market.
According to the latest Insight France report from international real estate firm Knight Frank, the shrinking prices are enticing buyers who are eager to get value for money, which is consequently driving up sales volumes.
Kate Everett-Allen, head of international research at Knight Frank, explained the changes imposed by French President François Hollande and indicated they were less unfavourable than initially anticipated.
“At €1.3 million, France’s wealth tax threshold is now higher than it was in the buoyant times of the mid-2000s and while Capital Gains Tax (CGT) has increased, its impact is mitigated to some extent where a double taxation treaty exists with the purchaser’s home country,” she said.
“This has been met with relief by some purchasers who had braced themselves for tougher regulations.”
Despite tax-related uncertainties over the past few months, France remains one of the more desirable second home destinations globally.
Most active in the current market are Northern Europeans, but the array of nationalities searching for prime property in France is on an upward trend.
While in 2010 web users from 133 countries searched for a property in France, this figure rose to 178 in 2012, an increase of 28%.