The Growth of French Real Estate Market in 2018

art hpiThe French real estate market has shown relatively stable growth in house prices in 2018 and is keeping up positive trends. According to the Real Estate Market 2018 report from CBRE, French economic growth in 2018 has seen the most favourable performance since 2011. This is because of general economic improvement in Europe which positively affected France1. Although external factors could prove less favourable in 2018 than in the previous year, the French economy has the potential to grow at a rate similar to 2017. Moreover, the developing French economy and overall European economic development forecasts that 2018 can be a good year for investment1.


The main forecast for the French real estate market is as follows: the amount of RE investments is expected to stabilise. Therefore, the French real estate market is forecast to continue an upwards growth. Diversification is likely to be the main cause for this, as investors are expected to choose differentiation strategies including both risk and asset categories1. As a result, the crowdfunding model which allows bigger diversification than traditional investment models may prove to be a valuable investment choice for them.

 

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According to CBRE, the outlook for the residential real estate is also good. Housing is increasingly becoming a desired asset category as its volumes are beginning to rise. Although there are not many free old properties on the market, there is an ever-growing amount of opportunities for off-plan acquisitions.


By looking at already published historical performance of the real estate market in particular, we can already see some results that may prove beneficial for investors who want to invest in French real estate. According to Informations Rapides, house prices went up by 3.4% year on year in the first quarter of 2018 in France1. The same source stated that year on year, house prices continued to increase (+3.4% after +3.3% in Q4 2017). Second-hand dwelling prices also grew faster (+3.5% y-o-y) than new dwelling prices (+2.6%). In addition to this, the Information Rapides published a report on the second quarter of 2018. This stated that in Q2 2018, house prices increased by 2.8% year on year1.


In general, 2017 showed admirable activity for both old and new properties alike, with an almost record volume of sales having occurred that year. Alongside this, there is growing demand from investors who want to invest in French properties. This demand is driven by low borrowing rates in the country. With a possible rate rise in 2018, the interest of potential investors is likely to see further growth1.

 

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Sources

  1. http://cbre.vo.llnwd.net/grgservices/secure/Outlook_France_2018-eng.pdf?e=1541079929&h=dc2dead864abee4d96bb9d8065f961a9