Lets Be Franc Now Is Time To Sell Sell Sell
Wednesday, 18 February 2009
With the euro at an all time high, British holiday home owners are erecting for sale signs knowing they can sell at a loss and still bring the cash home at a profit.
French Riviera estate agents, such as Chez Riviera, are reporting an almost 20 per cent increase in property sellers as the Brits take advantage of converting their sales profits back into pounds.
Donal Warde from Chez Riviera explains: "A property in the Eurozone selling at €200,000 would give its owner in the region of £188,000 - that's roughly a £57,000 increase over the last two years.
"There has been a marked rise in the number of properties being marketed in Nice on behalf of British clients who know they can still reduce their price and make a strong profit on their investment."
In the last year, pound sterling has dropped by almost 30 per cent due to the sub prime loan crisis, falling interest rates and a contracting economy.
James Walton from currency specialist , International FX, predicts this is set to reverse before the year is out. He says: "The exchange rate is currently around 1.05 which is fantastic news for sellers.
"However the pound looks set to make a recovery in the coming months. If in six months time the pound regains half of its losses then those sending money to the UK will have missed the boat on this windfall cash. Taking advantage now could ensure you end up with thousands more than expected."
Jon Carn from the West Midlands put his apartment, in the sought-after pedestrian area of Nice, on the market in November 2008. He explains: "Now is a perfect time to sell. We are keen to find a larger property in the UK and can get more for our money if we buy in England this year. Likewise it is a great time to sell in France as we will make money simply by converting the profit from the sale back into pound sterling."
Jon bought his one-bed apartment for €122,000 in 2003, using it as a holiday home, as well as occasionally letting it out as an investment. He can afford to be flexible with his current €190,000 asking price and still net a healthy profit.
Jon adds: "We had a good level of interest in November which slowed over the Christmas period, but that has picked up again in 2009. As the coming months are traditionally the time the French buy, I am confident I will agree a deal in the coming months."
Out of all the cities in France, Nice experienced one of the biggest increase in property values in the 06/07 period, FNAIM (French estate agents association) figures highlighting that apartment prices by 12.7% per cent to year ending December 2007.
A Notaire based in Nice, added: "Although the market has slowed and deals are taking longer to complete, they are still happening. For example, there has been a lot of activity on the average luxury property around the €1m mark by young Russian purchasers over the last year.
"In addition, many are reorganising their finances and taking advantage of the loans that are available at low rates by leveraging the equity within the property they already own in order to purchase holiday property."
The French property market has stabilised following French President, Sarkozy's, £280bn banking investment package. Nice, on the sought-after French Riviera, remains affluent and within easy reach of the rest of the Cote d'Azur, Monaco and Corsica.
Warde adds: "Nice has not experienced the over supply problems many holiday resorts suffer from as there is a lack of developable land and planning permission is difficult to attain. It also has an exceptionally strong rental market, especially in the summer. Average rents in Nice offer yields of seven per cent, which is around the second highest in France, after Paris, which continues to attract investors. We have started offering rental services to assist British clients take advantage of this market, as dealing with it in French and from a distance can be daunting.
"The French housing market has slowed over the last six months; however it has not experienced the drop in confidence levels seen in England. At the lower end of the market people are buying property requiring some work and at the higher end those with money to invest understand the benefit of taking advantage of today's markets.
"In addition, French mortgages are very attractive as they do not demand the high level of deposit demanded by British lenders and are cheaper than their UK counter parts at around 4.2 per cent - an interest rate which is also predicted to see further drops, as soon as within two weeks from now. This, coupled with the fact that savings are worth very little in Britain at the moment, is still encouraging buyers to invest.
"One novel way many British buyers are getting around the plummeting pound is to get French mortgages, therefore limiting their need to transfer pounds to Euro at the current rate. If you only have to pay 20% down instead of the whole amount, you are saving thousands of pounds, whilst maintaining a balanced investment portfolio with a Euro investment."
Buyers can borrow up to 80 percent of property value on a French mortgage over 35 years and the mortgage requirements are getting more competitive.
The best value properties are to be found in the medieval 'Old Town' district or in the Port area, while the Promenade des Anglais, on the clear blue sea front, remains one of the most in-demand and prestigious addresses in town.
France is also attractive for those seeking a property of over £1million with many high net worth individuals seeking better investment potential as the savings base rate falls.
Interior designer and former Changing Room star, Linda Barker, has taken advantage of the Riviera's strong rental market and purchased and renovated a £1.25million villa on the French Riviera a year ago. While suffering a hike in mortgage payments due the pound plummeting to almost parity with the euro, she is expecting to rent the luxury villa for in the region of £12,000 a week.
A seller from the West Midlands is also taking advantage of the exchange rate to sell his €1.3m 4-bed luxury apartment in the hills on the outskirts of Nice. He says: "We bought the 140 sq metre apartment off plan and it was a dream come true.
"We secured a French mortgage at 3 per cent interest rates and since then the exchange rate has increased from €1.46 to the £1 to almost £1 to €1. So we are paying almost a third more each month. However if we sell at the moment we seek to make a great profit by converting the money back into pound sterling.
"We do love Nice and its only four hours door to door so a great holiday location so I'm sure we will purchase again. With two new grandchildren I think we might opt for something more child-friendly."
Warde concludes: "It's a win-win situation at the moment. There has never been a better time to sell in the eurozone because it is about the exchange rate not the property price at the moment. It's also a buyer's market with bargains to be had and vendors willing to negotiate their prices.
"As France has a more stable property market than the UK, there is a good chance that prices in France will go up before the market recovers in the UK."