The last 12 months have seen many challenges, from the Brexit vote to Trump’s success to the French election and 2nd UK election, but perhaps the biggest dent to the local market has been the devaluation of Sterling. Although the Brits are not as dominant as they once were, they are still important and many have held back their plans to purchase because of the unfavourable exchange rate. This has affected the lower budget end of the market rather than the top end where clients may have already had assets in Euros, or have the collateral to raise Euros without transferring the funds from Sterling.
On the positive side, interest rates remain low with 15 year fixed rates still below 2.0% and marginally over for 20 years. The banks have proved very slow to process applications due to the sheer volume, but lending is strong and very attractive to potential owners and investors alike. Equally, where one currency falters, another strengthens and the US dollar is one to pick out, bringing a growing number of American buyers at all levels of the market.
Although it’s anyone’s guess what the UK’s withdrawal from the EU will mean for British buyers, the uncertainty has led many to bring forward their plans to buy in France, particularly those who are looking to make the move a permanent one. As one client commented, his knees may have packed up by the time there is any meaningful certainty in the market, which nicely describes the general sentiment. Clients are buying with their hearts rather than necessarily their heads.
Although wisdom suggests investors should turn to bricks and mortar at a time of uncertainty, it must make financial sense so buyers are showing increased interest in the potential rental performance of the properties, even if it is not their intention to rent. After three poor winters in terms of snowfall, the reliance on a strong ski season cannot be taken for granted and buyers must be careful with their rental forecasts. The summer season is key and can make the difference between a good return and a poor one – the “summer” is increasingly popular and increasingly long, extending from May through to October. This can be explained by an ever-growing interest in activity-based holidays, but also the explosion in trail running and the Tourist Office’s focus on new markets such as Asia.
The final challenge comes from a partial planning “freeze”, where the town hall are refusing applications that don’t meet the previous requirements restricting the amount of habitable area permitted on any particular plot of land, as opposed to the national rules which restrict only by footprint. This uncertainty will continue until the new Local Plan comes into effect, expected by 2018.
However, despite the challenges, it has been a very good year for sales and we have seen a very positive growth in business year on year. This is due in large part to an increased number of sales at higher budgets, but the sense is that the market is robust and many buyers are looking to invest here. The caveat is that the demand is focused on the traditional core areas – central Chamonix for apartments, walkable to town for chalets as well as les Moussoux, les Praz and les Bois. Other areas have remained relatively static, particularly les Bossons, Taconnaz and les Houches, although they do represent much better value for money.
In conclusion, we remain positive about the next 12 months. Emmanuel Macron’s election appears to have brought increased optimism and we hope that his pro-business, pro-Europe policies will give an additional boost to the French property market.