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French Riviera poised to benefit from demand from global wealthy buyers
Prime property prices in the world’s most expensive cities are cooling which means that wealthy property investors could look increasingly to other cities and leisure hotspots such as the French Riviera, new research suggests. While in France as a whole property prices and sales in the last three years have fallen the Riviera is still a magnet for wealthy buyers. Indeed, the area that stretches from St Tropez in the south west to the border of Italy is the third richest region in France. While prices in France overall were down 8.1% as of December 2014 compared their peak in the third quarter of 2011, the Provence-Alpes-Côte d'Azur (PACA) region consistently commands the country’s highest house prices and the second highest apartment prices behind the Paris region. The latest French Riviera residential market report from international real estate firm Savills also points out that it is an important global tourist market where some 17% of properties are second homes or occasional accommodation, compared to 11% nationally. The analysis points out that like the rest of France, prices have fallen in PACA and the market is a buyers’ one. Values in the region have tracked the national average closely, and are down 9.5% from a 2011 high. ‘The market did not see the same rally between 2009 and 2011 as that experienced in Paris, so values currently look better value than those in the French capital,’ the report says, adding that government rhetoric and negative media coverage around the taxation of wealth, coupled with a faltering domestic economy has slowed activity across the Riviera's prime markets. The number of €3 million plus deals fell by 44% across the region between 2007 and 2013. Cap Ferrat and St Tropez, home to the Riviera’s largest prime markets, saw the sharpest declines, down 69% and 54% respectively. ‘Although transaction numbers are down, purchasers of the region’s best properties tend to hold for long periods, with low gearing as these homes are viewed as a store of wealth, so forced sales are rare and, as a consequence, there is no mechanism for prices to fall substantially,’ the report explains. It also points out that property in the French Riviera for most is viewed as an asset with long term appeal and therefore a safe store of wealth and regional statistics disguise local market characteristics. ‘What sets the French Riviera apart is extremely limited supply in the most desirable spots. In Saint-Jean-Cap-Ferrat, a peninsula of land east of Nice, there are around 500 properties and only a handful come onto the market in any single year. Supply is kept low and prices high by wealthy buyers who hold for long periods and are not generally forced to sell,’ the report says. ‘Cap-d’Ail, Beausoleil, Roquebrune-Cap-Martin adjoin Monaco and have benefited from the surge in activity that the Principality’s residential markets have experienced. Significantly cheaper prime property is available here, albeit without the tax benefits. The area has proved popular with… Continue reading
Housing demand in UK reaches 11 year high
H ousing demand in the UK has reached an 11 year high with the number of housing hunters registering with estate agents reaching almost 430 per branch at a time when fewer homes go on sale. The number of house hunters registered per branch of members of the National Association of Estate Agents reached 439 in June, the highest since August 2004, and sales to first time buyers fell. This is 15% more than in May when 383 house hunters were registered per branch and it comes at a time when supply of housing stock fell from 46 in May to just 44 houses available per branch, widening the growing gap between supply and demand. ‘What we’re seeing is a market that lulled over the general election period, coming back to life in full force,’ said Mark Hayward, managing director of the NAEA. ‘Buyers are feeling more confident and those who put their plans on hold over the election and political aftermath have kicked off their hunt, causing this massive jump in demand. There’s also an impetus to buy right now in light of the impending interest rate rise as buyers fight to buy and fix mortgage rates. But the fact that demand is at an eleven year high without the housing stock to fuel it, is bad news for the market,’ he added. The monthly NAEA report also shows that as the gap between supply and demand widened in May, activity remained consistent, with nine sales made on average per branch for the second month running. However, the number of sales made to first time buyers declined in June, with the group accounting for just 24% of sales, compared to 29% in May. ‘Although activity is still slow, it’s very promising to see that the surge in demand and dip in supply hasn’t caused activity to halt, and houses are still being sold. However, the growing gap between supply and demand is worrying and clearly demonstrates that more needs to be done to plug this. The election was full of promises to build more houses, but now those promises need to be put into bricks and mortar to respond to demand,’ Hayward explained. Continue reading
New housing developments do not impact on surrounding house prices
A new study has shown that new house building in the UK has little discernible and consistent impact on local house price patterns. The report by LSE London at the London School of Economics and Political Science and jointly commissioned by Barratt Developments, the largest house builder in the UK, and the NHBC Foundation, examined whether a new development will always reduce prices or reduce the rate of increase in prices in the immediately surrounding area. Examining the impacts of eight recent residential Barratt developments on their local areas, the research concluded that prices did not decline as a result of development, although sometimes there may be some limited impact during construction. Once the developments were completed, the local areas generally moved with the market. One of the most common concerns of home owners across the UK is that a new build residential development nearby will reduce property values in the local area. For many people their new home is their largest single investment. The selected sites all involved fewer than 300 units and were substantially completed within the last five years. Spread across the South and Midlands these sites are typical of housing development outside city centres or wholly rural areas. The aim was to exemplify ‘ordinary’ developments mainly on sites where there had been objections, some significant, at planning permission stage prior to development. Five sites were built on land with previously higher amenity value, and three were built on land that previously had lower amenity value including derelict industrial land. Specifically, the research found that house price changes in the surrounding streets and the broader three or four digit postcode districts suggest that new developments may stabilise or even increase prices in the immediate areas once development is complete where the market is generally stable and rising. They also suggest that there is almost no evidence of Longer term negative impacts. For sites where a high level of opposition was experienced throughout the planning and construction processes, this opposition tended to decrease once the development is completed. In one case where there were high levels of opposition, at least half of all eventual purchasers of the new homes previously lived within five miles of the development. ‘Few would argue that the UK needs to build substantially more homes to avoid a housing crisis, but despite this, local opposition remains one of the main obstacles to achieving this,’ said Neil Smith, head of research and innovation at NHBC. ‘It is understandable that home owners will be anxious to protect their investment in their homes, and concerns about the negative effects of new developments have compounded the issue,’ he explained. ‘While there are clearly a number of factors affecting property values in specific areas, this research challenges the assumption that new build developments will adversely affect local house prices,’ he added. Philip Barnes, group land and planning director at Barratt Developments Plc, acknowledged that one of the understandable fears of new development is that… Continue reading
