France, with its convenient location just across the channel, has been a popular location for UK expats, both retired and working, for many years. With everything from fully-functional ski resorts in the Alps to sun-drenched beaches on the French Riviera, the country has something for everyone, whatever your interests or lifestyle.
If you have been planning to move to France, perhaps for a career opportunity or to build your dream retirement, 2023 might be the time to do it, with property prices expected to fall for the first time since 2015.
Property Prices Expected to Fall
Many real estate and economy experts as well as the Fédération Nationale de l’Immobilier (FNAIM) are predicting the price of properties in France to fall by as much as 5% during the coming year, with the larger cities such as Lyon and Paris being most significantly affected. This is due to a multitude of reasons, but the underlying theme is that buying property in France has become more expensive, and not everyone can keep up.
Rising Mortgages and Interest Rates
French banks and mortgage providers have tightened their lending conditions as they become more cautious of who they are offering mortgages to. This means that fewer people are eligible to borrow money to buy property, driving down demand and, as a result, prices. If you’re lucky enough to be in a situation where you are a cash buyer, this change won’t affect you, but expats looking to buy with a mortgage will find it even more difficult, with higher minimum property values and deposits needed to secure a purchase.
France has also not escaped the increase in interest rates being seen in so many countries across the globe, with interest rates expected to reach 3% by the end of 2023, almost tripling from the 50-year low of 1.05% seen back in 2021. As this means people will be repaying more for the same amount borrowed, many buyers have decided to wait for a more stable economic landscape to invest, once again, decreasing demand temporarily.
Thanks to improvements and developments in medical treatment, France’s population is aging with each coming year. This has meant that the older generations who bought property when it was more affordable are now struggling to maintain them, both practically and financially, and are consequently selling up and moving into alternative accommodation, meaning that more properties are on the market as a result.
Government Intervention on Second Homes
Another factor that has impacted the cost of properties in France is the government’s intervention on purchases of second homes, which will now incur significantly higher taxes. Combined with the rising costs of energy prices, this has meant that many people are considering or have already sold their second homes.
For UK expats, Brexit has also affected the cost of owning a second property in France. As legislation has reduced the amount of time a non-EU member can spend in the country annually to 90 days in every 180 days, owners can spend less time in their property. Tax on rental income from these properties has also been increased, making it less profitable to rent out the homes when they are not occupied by the owner.
However, this does not mean that purchasing property in France is off the table, especially if you are looking to move to France permanently. The decrease in property value can offset some of the additional costs above and make your dream a reality, click the link below to arrange a no-obligation, complimentary consultation with one of our experienced advisers.
If you would like to learn more about making a move to France and what you need to consider with regards to your financial affairs to make this possible, click the link below to arrange a no-obligation, complimentary consultation with one of our experienced advisers
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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.