Monday, 2 February 2009
Mud, magazines and a buyer's market
Last weekend a few of us, including a bona fide Frenchman, Alex, who is our hugely affable sales manager on French Magazine, piled down to the Bath Rec for a front-row mud-fest as the Heineken Rugby Cup group stage came to a soggy end.
With honours even in a low-scoring match, both sides progressed and as Bath didn't win, thereby dumping the boys from the Pink City into the swollen Avon, I am in no position to tease Fanny from the Toulouse Tourist Office. Who knows, we may meet in the final. Alex, an Aveyron lad with mixed allegiances on the day, quite sensibly refused to nail his flag to either team's mast. He kept schtum and ate his smelly burger. A top day out was had by all.
Back to work, then, and we are, in addition to preparing the April Issue of French Magazine (you need a subscription!) in the midst of making the Traveller in France Spring/Summer 2009 edition. This venerable 80-year-old tourism magazine, previously edited by the sadly missed Anne Gregg, will be available mid-March, and promises to be packed with holiday ideas, many with a nod to bargain breaks with a green or family twist.
Meanwhile, as the French property side of our industry seeks to find some kind of foothold against a wave of media naysaying, Penny Zoldan, a vastly experienced French Property agent, urges those with a few quid and a dream of living in France, to get looking sharpish while buyers have all the clout. Yes, the ex-rate is bad, but many people's savings are doing next to nothing sat in the bank. Meanwhile, prices are being slashed by those looking for a quick sale in France.
This is her latest reader Q&A in French Magazine - I would welcome your comments:
We have a reasonable deposit and intend to buy a property in France and wonder if we should leave it in the bank and wait for things to improve or buy a property now. Perhaps you can give us your views on the current market.
The property market in France has not been as affected by the ‘credit crunch’ as property in the UK. Historically the French have not allowed people to borrow so much to buy a property and have kept lending limits to reasonabe amounts so that people are not so overstretched and can afford to pay their mortgages. This means that there are not the number of repossessions we are seeing here and that those that are selling are selling because they want or need to. However, the market has slowed down tremendously as people have become a little nervous, which has led to price reductions from those who do want to sell – as well as the possibility of good negotiations for those who are in a position to buy – making it a real buyer's market.
Despite the fact that the Euro is a little weaker, you will find that you will be paying less in equivalent sterling for a property in France this year than you would have paid last year when the rate was better. This, added to the fact that with the Euro so strong, you will be buying into a stronger economy and will not have all your eggs in one basket, are very good reasons to buy now.
The Euro is expected by many of the currency specialists to rise a little more by March/April which, if you buy now, would be the time that you would be completing – it is not expected to reach the higher rates we enjoyed a year or so ago. If you are going to need a mortgage you will find that they are still available on the same basis of income to loan ratio as always but that you will need a reasonable deposit, which you mention you have.
With this in mind I would suggest you contact a mortgage broker (we can put you in touch with someone if you wish) who can get you an ‘in principle’ agreement to a loan prior to making trips to France to find a property – this will mean that you will be in a strong position to negotiate with a mortgage agreed and ready to go and will also confirm how much you will have available to you.
With the low interest rates being offered on savings in the UK, it would seem pointless to leave your money in the bank, losing value when you can use it to purchase in France at a time when prices are lower than last year and you are in a strong position to negotiate even further. I believe that over the next 5 years that prices will creep back so that you get much more capital growth on your investment in France than you would get if you were to leave it in the bank earning low interest.
Make the most of the quieter market, when agents will really work hard to research suitable properties for you and most properties are on the market because the vendors really want to sell now. If you are concerned about the outgoings, then consider renting out your property at the beginning to help pay your mortgage – the rental market is particularly good at present. The signs at the beginning of this year indicate that there is no reduction in interest in buying in France but that people are just a little hesitant, which I believe will mean that the market could soon start improving.
To sum up, as you are in the lucky position of having a deposit then taking into account the buyer’s market, the lower prices and the low interest in the UK on savings, I believe this could be an extremely good time to purchase in France to get the benefit of the growth in prices as the market picks up again.