French Property Prices Continue to Climb

01 September 2011

Property prices in France are continuing to rise, and have now increased by five consecutive quarters according to a report from French estate agents. Prices of properties sold in the second quarter of the year increased by an average of 3.3% compared to the first quarter, and property prices outside Paris fared particularly well as they increased by 4.3%.

 

In spite of this positive news, property experts are advising caution, saying that even though average prices have increased by 6.8% so far this year, it's important that vendors remain realistic about their properties value. Estate agents have seen an increase in enquiries from both local and international buyers, and there is increased demand for high-end property.

 

Whether or not these price increases continue remains to be seen, as there are fears the government's austerity measures could hit new home sales. There are fears that the government is considering cutting tax exemptions even further on sales of new homes bought by investors as rental properties.

 

If this happens it's predicted it could lead to a decrease in the number of new home sales next year which is estimated to be as high as 60,000 new homes. If this happens it represents €2 billion of value added tax losses and could lead to thousands of jobs being cut. The government has already cut tax exemptions on new home sales which are bought for rental purposes, and this will lead to a fall of €1 billion in VAT receipts and a loss of 30,000 jobs.

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