French property prices to increase, predicts Standard & Poor’s
Although French housing prices are expected to fall during the remainder of 2014, they should recover in 2015 and 2016, says ratings agency, Standard & Poor’s.
Leading ratings agency Standard & Poor’s (S&P) predicts a price increase for French property in 2015 and 2016 due to a shortage of housing and increasing demand thanks to low interest rates.
For 2015, a 1% growth is predicted, followed by a 2% increase in 2016. The expected fall in 2014, will be around 4%, S&P says, but starting next year, the French housing market should start recovering from its long period of decrease and stagnation.
Standard & Poor’s says the housing shortage is especially dominant in the bigger cities, which offer better leisure facilities and are therefore more appealing to domestic and international buyers.
Property construction hit a low in 2013 and the 330,000 new projects was the lowest since 2000, which “means a decrease of 20% in comparison to the previous year”, S&P reports.
The housing ministry published construction and new development data earlier this week. Between April and July, construction starts have declined by 19.3%. At the end of June, the French government announced a set of measures to boost the construction business, which according to le Monde should start getting results by early 2015.
S&P named other reasons for their predicted price boosts: the interest rate is down on a historic low in France, which makes buying more attractive for the French themselves – although it hardly affects international buyers, especially out of the European market. “The obliging monetary policy of the central banks support the upward trend in real estate prices”, S&P told the French newspaper la Tribune.
After 2016, S&P says there is a risk of further price falls as interest rates start to increase.