Ever since Covid the state of the market in the Alps has felt like a high speed train. This last summer has been no different. As before it really has been a sellers’ market. It has become the norm to have agreed sales within days of a new property being listed. 20 or 30 people inquiring about the same thing in the hours after a property goes online. The same buying pressures have existed since we started to come out of Covid in the summer of 2020. This is the same for both French and UK based buyers. Our customers are looking for a place to escape to, they are looking to protect their savings from inflation, and for some they are moving their money from sterling into the Eurozone. These pressures come up against an historically low number of properties for sale. The recipe is always the same, an increase in prices.
Before I go on, I’d just like to make a point. Many people assume that a healthy property market is one in which prices increase, and this is something that will make an estate agent happy. That’s not necessarily the case. Ideally there would be an even balance between buyers and sellers, and a good range of properties available for sale. Price increases would track inflation, sellers could sell in a timely manner (in around 3 months) and buyers would not feel under pressure to make a decision. Unfortunately life is rarely that simple!
Currently we have a number of competing issues that are starting to slow the market down. But maybe not as much as we first feared.
The first is mortgages. Mortgages are obviously a key component of any property market. In France, there are regulations that govern mortgage lending. The government sets a maximum rate that the banks can charge for a mortgage (taux de l’usure), the banks need to be able to borrow money on the financial markets for less than this, otherwise they are left with no margin to make a profit. That is currently hard to do. The consequence of this is that French mortgages available for French residents are hard to get and for foreign residents they have pretty much disappeared. There was a crisis point in October (that coincided with the UK government’s kamikaze budget) that scuppered a number of sales. However, there were still sufficient buyers looking who didn’t need mortgages, so we were able to rescue most of these deals. Currently the mortgage situation is not improving very quickly. Most of the brokers we speak to say we will need to wait until the new year before we can expect this situation to ease..
Another issue that is causing uncertainty is Inflation. This has both positive and negative effects on the property market. Inflation does drive people to invest in property, it’s a safer bet than keeping money as cash or as stocks and shares. The negative is that it makes us all poorer which makes people more cautious with their money and their life decisions.
I don’t like to talk about the future of the market. My predictions are about as useful as the predictions for how much snow we’ll get for the upcoming season. If the papers predict a bumper season you’d do just as well betting against them as agreeing with them. At Alpine Property we like to look at the number of new customers getting in contact on a monthly basis. Historically that has been our best bellwether for our future. Currently our new enquiries are down on 2021 and 2020, but up on all years prior to that. The post Covid years have felt very weird, so maybe we are just settling back to a new normal?
If you own a property in the Alps and wondered what it is currently worth. Head over to our property valuation page, it’s free and accurate.
And to see the latest chalets we have for sale, click on the following image.