A report in the French newspaper Le Parisien has stated that “the market is in freefall” as estate agents and solicitors report that sales of previously owned homes have fallen between 17% and 40% since the beginning of the year.
The slump in property sales is being blamed on sellers, who are stubbornly refraining from bringing down asking prices; the new French Socialist government, which has enforced higher taxes; potential buyers, who are delaying decisions in case house prices should fall, and tighter credit conditions.
This is more bad news for British owners of French property, who now have to pay a 15.5% extra social charge on any profit they make on their homes.
The extra charge, which was enforced this summer, cannot be counterbalanced by their UK capital gains tax bill.
As transactions become increasingly scarce, there are fears that the French property market is undergoing the stagnation similar to that in Britain – where low interest rates have kept prices from falling significantly but sales have plunged.
The French property market is 47% too high according to a study by The Economist, making it one of the most over-valued in Europe. With homeowners unwilling to sell below the asking price and buyers stalling, properties are lingering on the market, which is becoming increasingly sluggish.
A source also warned The Daily Telegraph that French house prices were at the top of a bubble and could experience a sharp fall by 40% over the next five to ten years.
Transferring money to France
Those who need to transfer money to France might want to review their options and find the best ways to transfer money abroad.
If you are looking to invest in France, think carefully about how you will be send money there. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.
So, if you wish to send money abroad to France – which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.
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