5 reasons to invest in property in France in 2023
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There are 5 very good reasons why you should consider investing in property in France during 2023. Whether you are looking to add to your buy-to-let property portfolio or to purchase a second home, the South of France represents an exceptional opportunity. Forget Provence and Cote d'Azur, where the high house prices fuelled by Russian and Middle East investors makes this market unsustainable for property investors.
The area we are focusing on for property investment in South France is the Languedoc region, covering the departments of the Gard (Nimes, Uzes and Aigues-Mortes), the Herault (Montpellier, Beziers, Pezenas and Cap d'Agde), the Aude (Narbonne, Carcassonne, Limoux and Lagrasse) and Pyrenees-Orientales (Perpignan, Ceret, Collioure and Argeles-sur-Mer).
The published Gross rental yields for France as a whole are a very uninspiring 2.79% (Source: www.globalpropertyguide.com). But this hides some wide regional variations and it is also calculated based purely on monthly rental income.
The South of France benefits from a double rental market, with long term monthly rentals supplemented by high weekly holiday rentals. If you buy the right type of property, you can benefit from both markets and achieve gross rental yields of around 6 to 9% per year.
With house prices still very reasonable, properties can be bought and paid off in under 9 years. Here we outline the 5 main reasons why you should seriously look at investing in property in France.
1. Property prices in France
The first reason to invest in property in South France, is that property prices in France are still just below their 2006 market high-point. House prices during 2021 grew by +5.9% across France, with only one region (Bourges in Central France), showing a stagnation. Property sale transactions have now increased for 24 sonsecutive quarters, resulting in over 1 million house sales being recorded in the 12 months up to May 2021 (1,130,000 house sale transactions).
Even the Covid-19 global pandemic has not dampened the French property market. Despite virtually no house sales being recorded in the period March to mid-May 2020, as soon as the confinement was lifted, the housing market has bounced back strongly.
The national body for French property lawyers, Notaires de France, highlighted an emerging trend since the Coronavirus lock down. A significant number of French property owners are now looking to exchange city centre properties for more rural houses, with more outdoor space and surrounded by nature. This trend is a consequence of the experience of the confinement and the increased options for working remotely (Source: www.notaires.fr).
The long term growth trends are forecast to continue during 2022, with house prices expected to rise by +3.5% and the level of house sales predicted to remain above 950,000.
2. High rental yields
The South of France benefits from two different rental markets. During the high season summer months, you have a very bouyant holiday rentals market. During the off season, there is a steady long term rentals market for house hunters or people looking for winter sun. During the 10 week summer season properties can be rented out per week for 2 or 3 times the monthly rental price.
This provides a very healthy annual rental yield of between 6.50 - 9.00%.
A 4 bedroom villa with swimming pool can be bought in the Languedoc region for between €380,000 to €420,000. The villa can be rented for around €2,250 per week during the summer and will attract a monthly rent of €1200 during the period October to May. This combined gross rental income of €31,600 represents an annual rental yield of 8.3% before costs.
3. Stable French housing market
The French property market is one of the most well-regulated markets in the world and due to the predominance of fixed rate repayment mortgages (over 85% of French mortgages) the property market in France has proved to be robust and stable, without major slumps. From a long term investment perspective, the French property market is a fairly decent bet.
Fourthly, the relative low supply of housing stock and the projected increase in demand flowing from the migration of Northern Europeans retiring in the South of France over the next 10 years, will see a steady increase in house prices in South France. As the population of Northern Europe continues to age, a sizeable minority are predicted to choose the South of France as either a permanent or secondary retirement home. The attraction of a mild Mediterranean climate, excellent health service and advanced transport network, makes the South of France an attractive destination. The Languedoc has 5 international airports, with many budget airlines flying from across Europe.
5. French economy
After years of stagnation under President Hollande, the French economy is showing strong signs of recovery. French GDP is forecast to hit +4.2% by the end of 2022 and +2.1% in 2023. Unemployment is starting to fall back below 8.0%. Inflation remains stable at around 1.1% and is forecast to increase slightly to +1.62% during 2022. New business creation is also running at an all time high, with over 70,000 new business start-ups being recorded in the month of September 2021 alone [Source: www.insee.fr].
France response to the Covid pandemic was swift and far-reaching. Vast amounts of money was spent on supporting households and firms during lockdowns. This kept the France's economy ticking over during the pandemic and and crucially, employees actually employed by their comapnies. As a result, Paul Krugman, the respected American Economist, argues that there has been far less fall-off in business activity and reduced household spending than in the US and other countries (where the economy was shuttered down and small firms in particular fell by the way-side). Writing in the New York Times, Krugman states that ". . . among major advanced economies, the star performer of the pandemic era, arguably, is France. For as long as I can remember, U.S. media coverage of the French economy has been relentlessly negative. Yet, the economy of France is doing pretty well" [Source: New York Times]
The actual impact of these measures, was that the French economy returned to pre-Covid output levels during the Autumn on 2021 - far ahead of Germany, the UK, Italy and Spain. Furthermore, with President Macron determined to continue the growth of the economy out of the pandemic crisis and towards meeting the challenging Climate Crisis goals, he is investing a further €100 billion euros in a green recovery plan.
French company profit margins back to levels not seen since before the global financial crisis. As a result, company investment levels are now higher now than before the Covid-19 crisis, while Europe as a whole still hasn’t recovered.
So overall, for the time being, the French economy looks to be be fairly rosey.
This summarizes the main reasons why I think that South France is a good bet for property investments during 2022. The above contains the hard economic reasons why France is a good destination for investors. But there are also softer, more intangible benefits. France remains the number one tourist destination in the World. It has among the largest collection of UNESCO World heritage sites. It has more Michelin star restaurants than any other country and it spends a huge amount of its income on supporting the arts, sports and its cultural heritage. The infrastructure in France is first class and its health service is repeatedly voted the best in the World. France is changing, but you can still find that family run bistro on the edge of a quiet square, the local village market bursting with colour and the old boys playing Petanque in front of the local bar. In short, France is a great place to buy a property, because France remains uniquely French.
Our business partner, Artaxa Immo, is a French real estate business that specialises in helping Foreign investors buy French property. The agency is based in the beautiful wine village of Roujan and provides a property sales teams across the Languedoc region. Artaxa is a genuinely International real estate firm, employing multi-lingual staff in the three regional offices. For further information about buying property in South France, please contact Jane Laverock on +33 6 95 50 19 21 or by email at email@example.com. Alternatively, if you have any particular questions you would like to ask about living in the South of France, then contact Iain by Email. If you liked the article then please share it with others using the Facebook and Pinterest buttons below.