Home | Finance

The Price of Old Properties Are catching Up With The Price Of New Developments

By: Nick Dowlatshahi

Read More About Finance

The price difference between old and new property in France has converged dramatically over the last 10 years. The difference between the two used to be 25% with new property being the more expensive but today this difference is negligable. The chamber of Notaires has said that this difference is just tens of Euros in Yvelines while the national developer "Nexity" says the difference is about 6% today.

Michel Mouillart a professor at the University of Paris-X has studied this phenomenon very closely and commented that if these trends continued then the price of old buildings could soon overtake the price of new developments. He concluded that the worrying thing about this was that the prices in the long term will fall into balance with the difference returning to 25% once again, stinging anyone who has over-paid for an old apartment.

The advice given is to compare property prices in the same area and only buy an old apartment if the price is 25% below that of a new one in the same area. Should the gap between the two be smaller than this the advice is to negotiate or think hard about whether this is the right purchase.

But Will French property prices keep on rising?

Property prices in France from October 2004 to October 2005 averaged an increase of 11.4% (Source FNAIM 2005). This is in contrast to the previous year which reached over 15% as a national average- so is the French housing market slowing down?

Figures show that in November 2005 the price of apartments rose by 0.3% while the price of houses by a more sturdy 1%, averaging out at 0.5% in total for the month. This has been the trend since January 2005 as apartments have increased in price by a slower rate than houses and seems to be re-adjusting to the much higher growth rates they were accustomed to from 2002 to 2004. Data shows that between 2002 and 2004 apartments rose by between 12% and 17.8% each year while houses by a more moderate 8.4% to 12.5% a year, hence the readjustment seems logical. Shrewd investors however concentrate on specific locations and quality and not just looking at the country as a whole. For instance statistics from FNAIM show that in 2005 prices in Bordeaux rose by 15%, Toulouse by 18% and Nantes by 22%- all on the west and South West coasts of France while Paris recorded just 6% growth in 2005 as it was the slowest mover. These price rises in the south-West look set to continue as percentage prices still haven't risen by nearly as much as they have in Paris and so still have plenty of room for strong growth. It is also interesting to note that these price rises have often been in the less sought after areas of cities such as Bordeaux, Lyon and Paris. "Capital" the French investment specialists have seen that in Bordeaux, the common areas of la Bastide prices are catching up with those in the sought after area of the "Rive gauche". So does this mean that you should be snapping up as much property as you can in the less prestigious areas of French cities? Probably not as it is quite normal that during boom periods less sought after property can increase in value very sharply and it is also true that they will also be the first to drop in value if the French economy stumbles upon hard times. The fact remains though that even in a slow market a well located prestigous property will always sell while a property bought in a less desirable location although cheaper by comparison could still be over priced and difficult to shift.

Therefore the advice is to choose your location and property type wisely and find out about local property trends before your purchase and the rewards are there for the taking.

Article Source: http://depositarticles.com/

Leapfrog Properties are the largest French property agency helping English speakers purchase property in France. www.leapfrog-properties.com

Please Rate this Article

 

Not yet Rated

Click the XML Icon Above to Receive Finance Articles Via RSS!
Additional Articles From - Home | Finance
Sign Up for a free account.
Our other websites
All about SEO
Beauty Tips Forum
Submit Articles
Member Login
Link Us
Submission Guidelines
Ezine Notifications
Article RSS Feeds
Sitemap
New Stuff
About Us
Developer
Good shopping portal
Link to Us
Contact Us
Privacy Policy
Terms of Service

counter easy hit

Powered by Article Dashboard