Friday, March 30, 2012
As the election in France draws nearer, how will the property market be affected?
The election in France is fast approaching. President Nicolas Sarkozy, of the centre-right UMP party, is campaigning to be re-elected, but is facing stiff opposition from the likes of François Hollande, the socialist who, for many, is regarded as the frontrunner in the election. Another François, M. Bayrou of the MoDem party is seen as a threat too, while, Sarkozy will also be nervously eyeing the far right, where another challenge to him is coming from Marine Le Pen of the National Front.
Sarkozy is fighting to avoid being the first one-term incumbent since Valéry Giscard, who failed to be re-elected in 1981. And the timing could certainly be better for Sarkozy, with the two-round election (on 22 April and 6 May) following hot on the heels of the financial crisis and uncertainty in the eurozone.
But what of the French property market? How will this be affected by the election?
Peter-Danton de Rouffignac, who advises on buying and selling property around Perpignan (www.FranceMedProperty.blogspot.com), says: “Looking back at comments in the early part of 2007, several referred to the election and predicted that 2007 would be l’année de la rupture with a dramatic fall in property prices compared with 2006 and earlier. Some even talked of a 25% drop till 2010 – in the event there was an overall reduction of 3% in 2008 and 7% in 2009, followed by a recovery in 2010.
“In early 2007 there was more concern about interest rates and the policies of the European Central Bank, amid admissions that housing demand remained ahead of supply. This was before the US sub-prime crisis and the collapse of Lehman Brothers in September 2008 which precipitated our current situation.
“Coming to 2012, there is a feeling that everything is on hold until June, though nobody can justify why. There were around 783,000 sales in 2011 (Notaires de France). Athough a report by L’Observatoire crédit logement CSA (8 February 2012) states that electoral years always provoke a ‘wait and see attitude’ among purchasers, it also cites the ending of the no-interest loan (PTZ) on 1 January, general economic uncertainty and concerns about unemployment among the factors that might contribute to a slowdown in the market in 2012 .
“Interest rates remain stable, the report concludes, and ‘the loss of France’s AAA rating appears to have had little practical effect. At worst there might be a rise of 0.5 to 1%.
“It is hard to find a reason for the caution simply due to 2012 being an election year. The parties have announced their programmes, and on the question of housing there is nothing dramatic in any of their proposals.”
Peter goes on to point out that all the major electoral contenders have drawn up rafts of proposals to help the supply of housing in France meet demand. Sarkozy’s include an emphasis on new-builds, the existing programme to sell or lease redundant public buildings and land to create more space for housing, and a proposal to cap rentals. François Hollande has spoken of building more social housing, giving away public land for social housing, penalising communes that do not build social housing according to current government levels, and capping rentals.
François Bayrou (MoDem) talks of putting onto the market the 500,000 empty properties (“Although analysis shows that there is generally a reason why a property is temporarily empty,” says Peter), helping tenants of private landlords, and ‘financial initiatives’ towards building and improvement.