What Effect Will the US Election of Donald Trump Have on Real Estate Prices in France?
France has close economic ties to America. Trump is a property magnate. The election sounds like it could be significant for French property; one thing has already happened.
Americans surprised themselves – and the world – on November 8th, when they elected self-described outsider candidate Donald Trump to become the country’s next president as of January 2017. The long term impact – in the US, in France, for real estate and otherwise – remains to be seen. In the short term, upon his election, the French OAT (government loan rate) 10-year average jumped from 0.4% to 0.8%, in the space of one day. It had already been gradually rising, but at a pace of around 0.1% a month. Private loan and mortgage rates, usually in line with movement in the OAT, are likely to increase soon as well.
France has very close economic ties with the US, its second largest trading partner after Germany. €35 billion worth of goods and services makes its way from the US to France each year, with €32.7 billion going the other way. Pundits seem to agree that Trump’s pragmatic character will take precedent over his protectionist rhetoric, and that these trade levels will be largely unaffected.
Real estate agency ERA’s French and European president, Francois Gagnon, outlined at least one “positive” for French property following the Trump election. Seeing the election as otherwise largely negative, he believes France could benefit from an exodus of capital from the United States, by way of French expats returning home after the election, or France pinching international investment that would have otherwise gone to American soil. Should this be the case, demand for French property could increase, boosting prices.
The answer to most questions about big political issues generally falls into the ‘wait and see’ category. So far, the sharp rise in government borrowing costs is very likely to lead to increased mortgage rates, which would cause at least a temporarily depressing effect on transactions and prices. But: let’s wait and see.