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Last Updated: Sep 01, 2017




In Metropolitan France, house prices rose by 2.9% during the year to Q1 2017 (1.62% inflation-adjusted).  This was the fifth consecutive quarter of year-on-year price hikes and the highest increase since Q4 2011, according to the National Institute for Statistical and Economic Studies (INSEE).

In Paris, the average price of existing apartments rose by about 5.5% (4.2% inflation-adjusted) to €8,450 (US$10,048) per square metre (sq. m.) during the year to Q1 2017, according to the La Chambre des Notaires de Paris.
  • In Île-de-France, the country's wealthiest and most populated region, the average apartment price rose by 4.6% y-o-y (2.9% inflation-adjusted) to €5,490 (US$ 6,528) per sq. m. to Q1 2017.
  • In the Petite Couronne (Small Crown), the average price of apartments rose by 4.3% y-o-y (2.6% inflation-adjusted) to €4,400 (US$ 5,232) per sq. m.
  • In the Grande Couronne (Great Crown), the average price of apartments increased 2.8% y-o-y (1.2% inflation-adjusted) to €2,950 (US$ 3,508) per sq. m.
  • In Hauts-de-Seine, one of the country’s most populous department, apartment prices increased 4.1% y-o-y (2.4% inflation-adjusted) to €5,360 (US$ 6,374) per sq. m.

The price rises were backed by surging demand. In 2016, housing transactions in France reached a record 848,000 units, surpassing the previous 2005 peak of 829,000 units, according to the European Central Bank (ECB). In Paris, the number of existing apartments sold rose by 23% in Q1 2017 from a year earlier, according to the La Chambre des Notaires de Paris. In Île-de-France, the number of existing apartments sold increased by 32% y-o-y in Q1 2017, and in Petit Couronne and Grande Couronne by 32% and 36%, respectively.

Residential construction is also up. In July 2017, dwellings authorized increased 6.7% y-o-y while new housing starts rose slightly by 0.6%, according to the INSEE.

The French housing market is expected to strengthen further during the remainder of the year, with strong demand buoyed by low interest rates, coupled with improving economic conditions. Nationwide house prices are likely to rise by 3% to 5% in the next twelve months, according to Trevor Leggett, Chairman of Leggett Immobilier.

France house pricesIn Q2 2017, GDP rose by 1.8% from a year earlier, the country’s strongest performance since late 2011, fuelled by rising exports and consumer spending. France’s economy is expected to expand by 1.4% this year and by another 1.7% in 2018, after growth rates of 1.2% in 2016, 1.3% in 2015, 0.6% in both 2013 and 2014, and 0.2% in 2012, according to the European Commission.

There are no restrictions on foreign ownership in France. Most property is likely to be freehold. Apartments are likely to be held in two forms of freehold: co-ownership (which has meetings of co-owners, with votes taken and accounts kept), and volumes, adapted mostly for mixed-use developments. There are also leaseholds, for up to 99 years.

Analysis of France Residential Property Market »


RENTAL YIELDS
Last Updated: Aug 14, 2017



The good news is that if you have an apartment in Paris you will have no trouble letting it. Demand outstrips supply, the main reason that rents are not higher being that French rental contracts are often long-term and there are legal restrictions on raising rents during the contract.

However gross rental yields from apartments in Paris are poor, at around 4.2% for small apartments and 3.9% for big apartments (however it is fair to say that our Paris yields results arguably may not reflect yields in less desirable locations, which are likely to be higher, because our sample focuses on Paris´ high-end city centre).

The price of a 120 sq. m. apartment in these locations is around EUR 970 per sq. m., or EUR 90.1 per sq. ft. This year, we did not find a big price-difference between smaller and larger apartments.

The average monthly rent ranges from EUR 32 to EUR 35 per sq. m., or EUR 3.8 to EUR 3.25 per sq. ft. Smaller apartments tend to rent for proportionately more.

Round trip transaction costs are high on residential property in France.  See our French residential property transaction costs analysis and our Transaction costs in France compared to other countries.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jan 19, 2015



Rental Income: The effective rate of tax on gross rental income accruing to nonresident foreigners is likely to be around 10.00% on an income of €1,500/month, according to calculations provided by Anthony & Cie.

Capital Gains: Capital gains are generally taxed at 19%. Capital gains tax is levied at 33.33% for non-EU citizens.

Inheritance: French private international law uses the standard double rule on inheritance: the law of the deceased’s domicile applies to moveable assets, and the law of the location of the property applies to immoveable assets.

Residents: French residents are taxed on their global income at progressive rates, from 5.5% to 45%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jan 19, 2015



Round-trip transaction costs in France can range from 7.90% to 28.99%%. New properties have the highest costs because of the 20% VAT but this is slightly offset by a lower registration fee. Real estate agent fees range from 3% to 10% typically split between buyer and seller.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: May 25, 2006



French tenancy law is very pro-tenant.

Rent: Though the initial rent can be freely agreed, the rent can only be revised once a year, and not more than the increase in the (new) INSEE rental index. In combination with a highly restrictive contract structure, this means that rentals of old apartments have tended to drag well behind new rentals and prices.

Tenant Security: An unfurnished property contract has, as a minimum, a three-year term, though furnished property contracts may be for one year. In both cases, even when the contract ends, the owner can only recover the property if he or a family member intends to live there, or he intends to sell. In addition, eviction through the legal system takes a long time.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Sep 01, 2017


French economy improving; unemployment falling

France gdp inflationOn an annual basis, GDP rose by 1.8% during Q2 2017, the country’s strongest performance since late 2011. Growth is projected to continue to strengthen, fuelled by strong investment and consumption, according to the Organisation for Economic Co-operation and Development (OECD).

“Firming domestic demand will be supported by rising confidence, cuts in social contribution and business taxes and continued favourable financing conditions,” said the OECD.

From 2004 to 2007, the French economy expanded by an average of 2.3% per year. In 2009, real GDP fell almost 3%, the country’s sharpest recession since World War II. The French economy expanded by almost 2% in 2010 and by another 2.1% in 2011.

In 2012, the economy stagnated, with growth of 0.2% as President Francois Hollande squeezed the budget deficit and firms slashed thousands of jobs. France’s weak economic expansion continued in 2013 and in 2014, with growth rates of around 0.58% and 0.64%, respectively. The economy has bounced back somewhat in the past two years, with real GDP growth rate of 1.3% in 2015 and 1.2% in 2016.

France’s economy is expected to expand by 1.4% this year and by another 1.7% in 2018, according to the European Commission.

Inflation was 0.7% in July 2017, with core inflation 0.5%, unchanged from a year earlier.

France had a budget deficit of 3.4% of GDP in 2016, down from 3.6% in 2015 and 4% in 2014. The deficit is expected to fall further to 3% of GDP this year, according to the European Commission.

The European Commission expects France’s public debt to rise to 96.4% of GDP this year and to 96.7% of GDP in 2018, up dramatically from 85.8% of GDP in 2011.

France’s unemployment rate is falling. In Q2 2017, the nationwide jobless rate stood at 9.5%, down from 9.6% in the previous quarter and 10% a year earlier, according to INSEE - the lowest level in five years.

Despite this, France’s unemployment rate remains above the EU’s average of 7.7% in June 2017 and the eurozone’s average of 9.1%.

Newly-elected French president Emmanuel Macron has begun taking steps to ease the burden of the country’s onerous labour code, and reduce the distance between the (highly protected) long-term employed, and those who are on short-term contracts or unemployed.

France unemployment“France’s problem is that it has had mass unemployment for 30 years,” Macron said. “The reality is that we are the only big European country that hasn’t won the battle against unemployment.”

The changes, if approved, are expected to make hiring and firing employees easier, in an effort to reduce the financial and legal risks of layoffs that discourage businesses from hiring more workforce.

Macron also plans to spend about €15 billion (US$18 billion) in training and to overhaul the tax system to encourage work and investment.

On an annual basis, GDP rose by 1.8% during Q2 2017, the country’s strongest performance since late 2011. Growth is projected to continue to strengthen, fuelled by strong investment and consumption, according to the Organisation for Economic Co-operation and Development (OECD).

“Firming domestic demand will be supported by rising confidence, cuts in social contribution and business taxes and continued favourable financing conditions,” said the OECD.

From 2004 to 2007, the French economy expanded by an average of 2.3% per year. In 2009, real GDP fell almost 3%, the country’s sharpest recession since World War II. The French economy expanded by almost 2% in 2010 and by another 2.1% in 2011.

In 2012, the economy stagnated, with growth of 0.2% as President Francois Hollande squeezed the budget deficit and firms slashed thousands of jobs. France’s weak economic expansion continued in 2013 and in 2014, with growth rates of around 0.58% and 0.64%, respectively. The economy has bounced back somewhat in the past two years, with real GDP growth rate of 1.3% in 2015 and 1.2% in 2016.

France’s economy is expected to expand by 1.4% this year and by another 1.7% in 2018, according to the European Commission.

Inflation was 0.7% in July 2017, with core inflation 0.5%, unchanged from a year earlier.

France had a budget deficit of 3.4% of GDP in 2016, down from 3.6% in 2015 and 4% in 2014. The deficit is expected to fall further to 3% of GDP this year, according to the European Commission.

The European Commission expects France’s public debt to rise to 96.4% of GDP this year and to 96.7% of GDP in 2018, up dramatically from 85.8% of GDP in 2011.

France’s unemployment rate is falling. In Q2 2017, the nationwide jobless rate stood at 9.5%, down from 9.6% in the previous quarter and 10% a year earlier, according to INSEE - the lowest level in five years.

Despite this, France’s unemployment rate remains above the EU’s average of 7.7% in June 2017 and the eurozone’s average of 9.1%.

Newly-elected French president Emmanuel Macron has begun taking steps to ease the burden of the country’s onerous labour code, and reduce the distance between the (highly protected) long-term employed, and those who are on short-term contracts or unemployed.

“France’s problem is that it has had mass unemployment for 30 years,” Macron said. “The reality is that we are the only big European country that hasn’t won the battle against unemployment.”

The changes, if approved, are expected to make hiring and firing employees easier, in an effort to reduce the financial and legal risks of layoffs that discourage businesses from hiring more workforce.

Macron also plans to spend about €15 billion (US$18 billion) in training and to overhaul the tax system to encourage work and investment.







  • Low effective rental income tax
  • High yields in Paris
  • Global political powerhouse
  • Moderate to high transaction costs
  • Pro-tenant rental market
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €12,796 For a 120 sq. m. property, usually an apartment.
Rental Yield: 2.79% For a 120 sq. m. property, usually an apartment.
Rent/month: €3,564 For a 120 sq. m. property.
Income Tax: 10.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 18.45% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 33.30% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Strongly Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

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