Where have all the UK & irish buyers gone?
In the last 12 months the property market has changed dramatically. The flow of second home buyers and people looking to move to France permanently has reduced to a trickle. This is because people who are looking for a second home see this as a luxury purchase and with the current economic uncertainty are weary of committing themselves to such a large luxury purchase. Add to this the poor exchange rate (for UK buyers), the slow-down of the property market in Europe generally and all the negative press and its not hard to see why this has happened.
The number of buyers have fallen and the number of enquiries required to make a sale has doubled or tripled so the cost of marketing has been the key priority for many agents. The number of UK & Irish based agents that have ceased trading has also increased considerably over the past year and in all likelihood will continue to do so over the next 2 years.
There is however still activity for certain buyer profiles-
•1) People looking for dirt cheap plots of land or renovation projects at prices between 20k and 100k Euros which are so cheap that it does not represent a significant part of their wealth and they are taking advantage of current bargains on offer. Buyers are normally aged between 30 to 50.
•2) High Net Worth individuals looking to spend 1m Euros+ on a property also taking advantage of excellent deals on offer and who normally buy in cash. They are wealthy enough that they are not so impacted by the economic slowdown. These buyers are usually age 50+
•3) Investors/savers- this actually accounts for the majority of business that Leapfrog Properties has been doing over the past year. They are people who almost always take out the maximum mortgage amount- often 100% (so they are not affected by the exchange rate) and invest in very low risk, long-term, secure investments like French leasebacks. These buyers are usually aged 40-50.
All profiles are worth noting but the most interesting one I believe is the 3rd group- investors/savers. These are people who are looking to create a good pension fund of their own, who often already have money tied up in various savings schemes, bonds, shares etc and who are looking to put their money into something more secure like bricks and mortar. The upshot of the banking crisis is that many people are wary of investing in the stock market and banks are not necessarily the safest place to put your money anymore.
Because the French property market is in relatively good shape compared to some of its European counterparts we are seeing many investors seriously consider this option. A year or two ago some investors may have sneered at French rental incomes of around 5% and capital growth of 5% per annum in favour of "Emerging markets" which were promising capital appreciation of 30% per annum and rental income of 10% per annum. However, they have been brought back to reality after seeing many of the touted "emerging markets" actually being "volatile and weak rental markets" and markets with no exit strategy and in the current economic world climate are not so ready to believe the annual 30% capital growth forecast by some of the agents selling these locations. More and more people are investing in French property as a real alternative then to leaving it on a deposit account and certain French leasebacks (and some buy to lets) are benefiting from this. It is a definite Change from the previous years of investing to make a quick buck to now saving for the long term. Reality has bitten in the world property markets and its not necessarily a bad thing.