Market figures recently released for the first quarter of 2008 show positive results in the world of alpine property , with mountain and lakeside resorts continuing to perform well. Despite the property market slow down experienced in the UK and many parts of France, property values in many resorts in the French Alps grew in the year between April 2007 and March 2008.
The French Alps is one of the most unique property markets in Europe; not only are buyers in the Alps able to enjoy a fantastic ski and summer season in their property, the Alps are also amongst some of the most environmentally protected regions of France; planning restrictions are strict and land to build on is extremely limited. In recent years this combination of limited supply and increasing demand from second home owners has driven strong capital growth across the region as a whole, in particular in the mountains. In the lakeside destinations, such as Annecy and Lake Geneva, property prices have been driven by local and international businesses attracting high numbers of buyers drawn to a lifestyle and quality of life that other parts of France and Europe simply can’t beat.
In the first quarter of 2008 resale apartment prices across the mountain resorts of Haute-Savoie increased by just over 3% and in the Annecy area the average increase was 2.5%. Some of the strongest performances were experienced by those resorts which have long been favourite property hot spots with international buyers; Chamonix Mont Blanc saw prices up by almost 8.9%, Morzine just under 10.9%, Megeve by 7.5%, La Clusaz by over 7.3% and Le Grand Bornand by 13.8%. New build apartment prices are continuing to perform well, reflecting increased demand for spacious property, in good condition and with multiple bathrooms. Globally new build prices increased by 4%, with the mountains performing well at 5.6% up and the Annecy area up by 5.9%. Certain resorts in the mountains performed very well, notably Saint Gervais les Bains, with an increase of 25% and Samoens with an increase of just over 32% up. Land is still difficult to find in both the mountain resorts and the Annecy area and this is reflected with strong growth of 9.6% overall; 16% up in the Annecy area and 8.5% up in the mountains.
So why are the Alps continuing to hold their own during an increasingly difficult economic period for both the UK and the euro zone? Firstly, French banks have always had a sensible lending policy. Buyers are legally not allowed to take on debt of more than a third of their income, ensuring that they do not over-extend themselves with their mortgage. They also need to provide a 15% - 20% cash deposit for the bank to approve their finance. The same rules apply to international purchasers, so the banks approach each loan application with these stringent rules in mind. It’s relatively rare for a French bank to repossess a home, so for their own protection the banks want to be certain that you can afford the property you purchase. Many buyers in the Alps have taken out a French loan to fund their purchase so they have been vetted and approved as being comfortably able to afford their property. As a result the problems surrounding the cancellation of attractive 100% or 120% mortgages and buyers over-extending their personal debt don’t apply here. It is also difficult to release equity on a French property and this combination of factors means that the housing market here is not experiencing the same bumpy ride as that of the UK.
Secondly, the Alps have historically had a real shortage of property for sale. Planning restrictions here are strict and little land is available for development. Home owners in this part of France tend to be in it for the long term and reluctant to part with their property – whether they are locals in a much-loved family home or affluent second home owners. Unlike the vast volumes of unsold new build property available in markets like the UK and Spain, limited development in key locations in the mountains has maintained new property values. There is still a huge amount of interest in owning a property in this part of France from both French and international buyers and quality property continues to sell.
Thirdly, many properties here are second homes. Property owners are typically affluent investors who can also maximise the return on their investment through seasonal lettings. They do not need to sell because they are relocating through work or to move closer to family, so their motivations and pressures to sell are different to many other home owners. If they feel that the market conditions aren’t right they won’t place their property on the market and this further restricts available property to buy.
The current marketplace is an interesting one. Good quality property in the mountain resorts continues to be in short supply, thus holding its value and continuing to sell. High value property in the top end of the market is also doing a good trade. Older and tired property is proving slower to sell and these vendors are being more realistic about what their property is worth. Current UK property market conditions have made buyers cautious and many are adopting a “wait and see” approach. The result is a pent-up demand which will be released when consumers feel that the cycle is beginning to move upwards again. A savvy buyer would know that now is a good time to invest – when a slower market enables negotiation that wouldn’t have been possible 24 months ago. If you are looking for a ski or summer property in the French Alps then please contact the Ascendant team. We are always happy to discuss your requirements and provide information on the local property market.
About the author: The author is a real estate agent who has good knowledge on the Property for Sale Annecy . For more information he recommends you to visit http://www.ascendant-property.com/
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