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Make no mistake, France as a whole has seen the growth in its housing market slow since 2004 when it saw an impressive 15.4% growth in prices compared to just 4.7% in 2007 (source FNAIM). However like most property markets it is all about the location and micro-location so that even in slower times you can make sure that your property continues to increase in price. Take old favourites such as Cannes and Nice which each saw property price increases of 8.2% and 9.1% respectively this year which are healthy indeed and the South East as a whole grew by 6.5%. North and East of France also did well with property price growth averaging 6.4% this year. On the other hand the South West which had been doing well up until now and was seen as more "up and coming" rather than established has dropped quite dramatically to just 0.2% this year. One of the best performers so far though this year has been Limoges in Limousin achieving 11.3%.

If you invested in France just recently and expected to make a quick buck overnight and get out then depending on where you invested this news won't exactly be music to your ears. If however you were advised (as you should have been) to view it as at least a 5-10 year investment then you won't go far wrong. What we are seeing in a number of areas with slow house price growth is in fact healthy growth in the rental market instead. Paris for instance which experienced house price growth of 4.7% actually saw rental income increase by 4.6% bringing average yields across the city to 4.5%. This often happens in a slow property market as demand for rental property increases and gives a chance for rentals to catch up with house price growth. Therefore if you are a landlord who bought diligently you will actually be reaping the rewards now of steadily increasing yields and a property in high rental demand.

For those looking to invest now it is an excellent time to buy as it is such a good buyer's market. Euro interest rates although the highest they have been since 2004 at 4% are widely expected to decrease in the near future and are still not so high as to make mortgage payments difficult. Mortgage products are also becoming increasingly flexible and competitive and many banks are in fact now offering 30 year mortgages and up to 100% finance which should help investors. We are also witnessing offers of 10 to 15% below asking price being accepted which historically is virtually unheard of in France. If you couple this with the agency margins being squeezed the result is some rather juicy deals out there waiting for the savvy investor.

Niclas Dowlatshahi is Managaing Director of Leapfrog Properties- an agency that specialises in helping foreigners buy property in France. http://www.leapfrog-properties.com

Article Source: French Property Market Performance in 2007

 
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