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Inside the Market / Market Stats

Sales of new-build property soared in early 2016

Construction New Build Rise Property Increase Sales

Sales for new-build residential property jumped by over 20% in the first quarter of 2016. Prices have remained stable and even dropped slightly in expensive areas such as Île-de-France and the Nice-Côte d’Azur metropolis.

Promoters had noticed an influx of buyers interested in new-build real estate since January, but hadn’t yet quantified the rise in sales. Data collected since confirms the sector’s recovery, with sales from new-build promoters to homeowners — excluding rental investors — increased by 20.3% in the first quarter of 2016.

This is according to figures published by the quarterly observatory of the Promoters Federation (FPI) and chiefly due to the fall of interest rates on loans. Sales of new-build property to homeowners have jumped to 13,329 in the first three months of 2016. This is a net improvement on the lowest recorded figure of 9,796 sales during the first three months of 2012.

Sales to rental investors have also continued to rise, with a 12.9% increase over the first quarter of this year. This upwards trend had begun at the end of 2014 with the launch of the Pinel tax exemption program for rental investment. New-build units sold to rental investors total 12,260 in the first quarter of 2016, still lower than the 15,109 achieved in the first quarter of 2010, but a definite improvement 2013’s first quarter’s low point of 5,108 sales.

According to the FPI, the growth in sales to both occupant owners and rental investors has allowed prices to remain stable. Over the whole of France, prices have grown by 0.5% over the first quarter of 2016, but there are disparities between regions.

In Île-de-France, prices have dropped by 0.2% despite a 28% rise in sales — +33% to occupant owners and +22% to investors. Price per square meter for new-build property in the region averages out at 4,607€/m2. In the Nice-Côte d’Azur metropolis, where the average price of 5,114€/m2 is the highest in France, prices have also dropped by 0.9%.

In more dynamic and cheaper urban areas, prices for new-builds are rising. They have increased by +5.5% in Nantes to reach 3,673€/m2, by 4.2% in Bordeau (3,654€/m2), by 2.5% in Toulouse (3,475€/m2) and by 1.6% in Strasbourg (3,325€/m2). Les Echos ventures that this could be due to new-build real estate buyers wishing to live in the property rather than rent it out are increasing. They are often more cautious about prices, compared to rental investors who prioritize rental yield.

The new decrease of interest rates on loans which began in March — allowing buyers to find 1,5% rates over 20 years — these types of sales are likely to keep increasing. However, the FPI notes that “when interest rates rise again, which will necessarily happen one day, recovery will slow because the structural problems present in the French housing market have not been addressed, chiefly the fact that prices are not decreasing.”

Photo credit: Pixabay / Cegoh

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