Real Estate

Has France’s property market turned a corner?

France's falling house prices showed signs of stabilizing in the second quarter after the government "found a certain sense of reality", says one estate agent. However, in the capital Paris, real estate continues to drop.

Fred Dufour | AFP | Getty Images

In the second quarter and for the first time in a year, French real estate prices have stopped their quarter-on-quarter decline, growing 0.0 percent, according to the latest INSEE figures released Thursday. However, on a yearly basis, prices dropped 1.2 percent, following a 1.9 percent fall in the previous quarter.

Prices in the French provinces grew slightly, 0.2 percent, but the Ile-de-France region – in which Paris sits – registered a 0.5 percent fall on the quarter, bringing prices 2.0 percent lower on the year.

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A stabilization in the capital still seems way off as according to French online estate agent, the price drop accelerated in the summer.

Government to the rescue?

Faced with a newbuild shortfall and the failure of its "Target 500K" initiative to build half a million new houses every year to 2017, the government unveiled a slew of measures in early July to boost the sector. These include the simplification of construction rules and regulations as well as the extension of the "0 percent interest loan" to boost middle and low-income first-time buying.

Housing starts in the twelve months to May were at the weakest level since 1998 and the latest official figures show that new build starts in the three months to July dropped a further 0.3 percent.

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"After over two years of delays, contradictory decisions, of laws and decrees discouraging investors, the recent announcements go in the right direction: that of realism", Sebastien de Lafond, co-founder and president at wrote in the report.

"But, we shouldn't expect a miracle", he added as the bad health of the real estate market stems mostly from a "lack of confidence from individuals and banks" and as banks still prefer to keep the purse strings tight, the amount of buyers is still on a downward trend.

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