Thinking of buying a house in France? Prices have just dropped 10%
With many European economies finding recovery from the worldwide financial crisis heavy going, in the UK at least we finally have something to be positive about, as our economy seems at last to have turned a corner. As a result and thanks also to more positive market sentiment and some encouraging words from Mark Carney, the Governor of the Bank of England, hinting that a UK Base Rate rise was very likely sooner than many had expected, sterling has been slowly but surely appreciating against the euro. The effect of this rise has been to give British buyers a welcome surprise in the form of an across the board 10% price cut on French real estate and all euro denominated property prices.
Sterling is now trading consistently at close to €1.25 euros to the pound, compared with €1.15 around 12 months ago. Applying this change in the value of the pound to the average price of a French property bought by expatriates last year which was €354,000 and the sterling equivalent price has just dropped from £307,000 to £283,000, a reduction of nearly 10%.
Tim Harvey of euro mortgages specialists Offshoreonline.org comments, “Anyone considering buying in France, Italy or Spain, all of which have traditionally been popular with UK buyers, will be aware of the effect of currency on the price they pay. Whilst buyers must always protect themselves against drops in sterling, when the opposite happens, buying French and other euro denominated property with a French euro mortgage gets cheaper, thanks to the stronger pound. There are several ways to buy homes in France – French mortgages are available to fund up to 85% of most purchases – or buyers can choose to raise capital against a UK home and buy for cash, a strategy that would lock in the sterling gains of the past year.”
Following the latest drop in lending rates in Europe, mortgages are now widely available at interest rates which are comfortably under 3%.