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Inside the Market / Market Stats

How Does Access to Property in France Compare With the Rest of Europe?

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France’s property market has been a silver lining to its glum economic cloud this year, especially in the capital. Looking at the bigger picture, it’s worth asking: how do things like mortgage rates, borrowing, ownership and prices in France compare to her European neighbours? 

Mortgage Rates

In 2015, the average mortage interest rate in France was 2.13%. This year, it hovers at 1.5%, with 15-year loans seeing rates as low as 0.9%. This rate is one of the lowest average rates in Europe, with only Germany and Denmark borrowers enjoying slightly lower rates.

The average for the EU in 2015 was 2.8%; Britain’s was at 2.61%, and Hungary had the highest, 6.21%. Loan periods in Poland and the Netherlands – where rates are higher – average 26 and 29 years, respectively, whereas in France the average time period is 19 years. The standard British mortgage is 25 years.

Borrowing Levels

To buy a property, Europeans borrow an average of 41,000 euros. France sits above this number, with its average figure nationwide around 47,000 euros. The proportion of debt tied to property is twice as high in France as it is in the UK or the Netherlands.

Rates of Ownership

Despite historically low interest rates, access to property remains difficult for much of French society, mainly due to difficulties obtaining a CDI, or long-term work contract. A recent study showed that only 3.5% of those on a CDD (short-term contract) manage to secure a mortgage.

The rate of homeownership in France is 60-65%, while the EU average is about 70%. Poland tops the list with 84% of people owning their own home, while Italy and Portugal have figures of around 75%. The Nordic countries tend to have the lowest rates, and only half of Germans are homeowners. The United Kingdom is roughly similar to France, with a slightly higher rate according to some estimates.

House Prices and Rents 

The market has performed well this year, with house prices in the French capital set to have increased 6% through 2016. This is good news in a period of little growth from 2006 to 2015, averaging only 2%. 2011 was a particularly bad year that depressed the average substantially, with prices falling 11% in that one year alone.

In this same period, other markets fared much better: Germany and the UK rose 21% and 30% respectively. Southern Europe hasn’t fared so well, with Spain and Italy seeing falls of 22% and 12%. Property prices in the Netherlands fell 9%.

Non-homeowners in France spend a relatively low proportion of their salary on rents, 18.3% on average. The figure for the Netherlands and Germany is one third, while Brits spend a quarter. Only Italians spend a lower fraction of their salaries on rent.

image © wikicommons

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