■ The older house market

Volume2011 saw a new record set for the volume of property transactions, with 858,200 older houses recorded as changing hands. This beats the previous record of 837,000 transactions, established in 2006.The sustained activity from the 3rd quarter essentially continued in the 4th, due primarily to the effect of “reform of the imposition of capital gains on property”. This rise continued, albeit less strongly, through to January 2012 ; so far, we have seen sales falling since February, particularly in Greater Paris, where in February 2012 they were down by 14% compared with February 2011. in the French Provinces, a downward trend in terms of volumes has also taken hold.

PriceThe rise in prices over one year recorded in the previous quarters in line with the Notaires de France/INSEE indexes remained generally strong in the 4th quarter of 2011 for Greater Paris: 10.6% for apartments and 5.7% for houses. This increase is far more moderate in the French Provinces, at 2.7% for flats and

1.3% for houses.

The 3-month variation, i.e. that from Q4 2011 compared to Q3 of the same year, is quite different: the development in the provisional crude index is negative for the region, slightly for apartments (–0.4%) but more markedly for houses (-1.3%).At department level, we note fairly wide annual variations both upwards and downwards, with, for example, a strong increase in Corsica (in both departments and all types of property included), upwards of 12% in Southern Corsica and 25% in the island’s northern half. Conver-sely, certain departments such as Haut-Rhin are displaying falls of 1% for apartments and 6.9% for older houses.

In the majority of the large conurbations such as Toulouse, Lyon, Nice and Marseilles, the one-year trends are still positive for older apartments, at over 2%, whereas in others, such as Lille or Saint-Etienne, slight falls have been observed.

Where houses are concerned, most of the conurbations are displaying a downward trend, most notably Amiens (-10.3%) and Saint-Etienne (-9.5%), although nearby Clermont-Ferrand has chalked up a rise of 8.9% for apartment prices and 4.2% for houses.

We have also detected a slowdown in prices for the previous quarter, Q3 2011, and early pre-contract data confirms this downward trend.

■ The new housing market

According to the Marketron report (on sales of private detached houses), the annual num-ber of transactions involving such properties was down by 12% at the end of February 2012. The slump was even more marked in western France (Loire region), where a 26% fall was re-corded. As for housing development, sales in Q4 2011 were 4.1% up on Q4 2010, a fact which can generally be explained by some end-of-year enthusiasm on the part of investors. In contrast, over one year (2011/2010), a drop of 10.5% was recorded in the number of sales.Six regions have experienced a slump in the price of new housing, particularly the Poi-tou-Charentes region (-21.8%), with the me-dian price for France as a whole standing at €3.731/sq. m. for Q4 2011, up 2.8% on Q4 2010 (€3.630 /sq. m.).This rise is very similar to that for houses, which shows an increase over the same one-year period of 2.2%.The number of houses newly granted planning permission (using seasonally adjusted data) fell by 3% in Q1 2012 compared to Q4 2011, whereas the number of builds commenced rose by 1.3%. Over a year, however, the deve-lopments recorded at the end of March 2012 remain distinctly positive (+14.1% for autho-risations and +9.9% for builds commenced), with apartments leading the way (+33.9% and +23.1% respectively).

Credit situationAccording to provisional data from the Crédit logement / CSA observatory, the distribution of home loans has undergone a sudden fall since the start of 2012, down 32% in 4 months com-pared with 2011. Part of this contraction can be attributed to an anticipatory movement caused by the announcement of the reduction in govern-ment support for homeowners (Scellier system and interest-free loans), although it might gene-rally be put down to the prevailing economic gloom, the pre-electoral wait-and-see approach and the tightening up of loan conditions. In par-ticular, loan periods have been reduced, leading to a fall in the average interest rate applied, whereas over a consistent period, interest rates remain stable.

analysis

INSEE (French National Statistics & Economic Stu-dies Institute) and Notary indexes

Older apartments Older houses

Index value Variation* Index value Variation*

2011 Q3

2011 Q4

3 months

1 year

2011 Q3

2011 Q4

3 months

1 year

Mainland France

115.6 115.2 -0.4 % 6.5 % 109.1 107.6 -1.3 % 2.,1 %

Greater Paris 122.7 122.2 -0.4 % 10.6 % 112.9 111.7 -1.0 % 5.7 %

French Provinces 109.1 108.7 -0.4 % 2.7 % 108.2 106.7 -1.4 % 1.3 %

* 3-month variation: development between 2011Q3 and 2011 Q4 * 1-year variation: development between 2010 Q4 and 2011 Q4.

market reportFrench property

N° 15 - MaY 2012

NOTairES DE FraNCE - # 15 - May 2012

French property

market report

Median price per sq. m. of older apartments Development over 1 year: 1 October 2011 to 31 December 2011 / 1 October 2010 to 31 December 2010

Strasbourg2 420 €

6.1 %Tours 2 368 €10.8 %

Nîmes 1 972 €

5.6 %

Saint-Étienne 1 307 €

0.5 %

Orléans 2 139 €

3.2 %

Grenoble2 414 €0.0 %

Clermont-Ferrand1 719 €11.7 %Bordeaux

2 815 €7.6 %

Montpellier2 647 €

4.7 %

Nantes2 691 €

8.1 %Dijon

2 259 €8.2 %

Bourges1 525 €-0.3 %

Lyon 3 150 €

6.4 %Limoges1 326 €

1.5 %

Poitiers1 721 €

8.2 %

Rennes2 295 €

4.9 %

Caen2 250 €

8.0 %

Mulhouse1 201 €-5.2 %

NS

Besançon1 875 €

3.7 %

Marseille2 500 €

0.0 %

Nice3 739 €

4.7 %

Guadeloupe 2 889 €28.0 %

La Réunion 2 529 €-5.6 %

La Martinique 2 508 €-4.7 %

Toulon 2 392 €

4.3 %

Corse-du-Sud 2 890 €12.7 %

Haute-Corse 2 466 € 25.5 %

Reims2 141 €-2.6 %

Nancy1 899 €

1.1 %

Metz1 901 €-0.3 %

Outlook

For several months now, we have unquestionably been starting a new phase, both for older and new properties. We are not in a “property bubble” as we were in 2008-2009.When it comes to determining outlooks, however, we can analyse only in terms of possible scenarios:

Scenario 1• Interest rates remain at their current level (or

even continue to fall), which is currently the case. The new fiscal policy applicable to property and to assets in general remains moderate with, in particular, capital gains tax rates on property being based on 22 years instead of 30;

• New rent control legislation is not frightening off investors.

Scenario 2• Interest rates, whether because of national or

international reasons, rise considerably, pricing out potential buyers,

• The new tax legislation concerning assets or the civil legislation on rent creates a loss of confidence, fear and uncertainty with regard to the future, leading, as is already the case for first-time buyers, to pensioners and the middle classes withdrawing from the property market.

■ Older propertyIf, over the coming weeks, the first scenario occurs, there is no cause to change the forecasts which we made in early 2012, namely:• a fall in volumes of around 10 to 15%, with the

result that there would be between 700,000 and 740,000 sales of pre-owned properties during 2012 as a whole,

• A moderate price reduction of around 5% to 10%, closer to 5% on the more attractive and tighter markets, and nearer to 10% on other markets.

If it is the second scenario that occurs, we would then see a fall in volumes that would take us below 700,000 sales, accompanied by considerably sharper price reductions.

■ New propertyVolume

Whichever scenario develops, 2012 will not be a good year in terms of volume. On the one hand, there are the investors who, in view of the new tightening of tax loopholes announced in the Socialist programme, are set to desert new housing.This trend could even be accentuated if severe rent control measures are introduced.Moreover, first time buyer numbers are not going

to be any higher than in 2011, despite the hope for something of a boost linked developers increasingly offering to cater for purchasers with new interest-free loans, provided, of course, that this is not reviewed.

Prices

Neither the measures from the previous government increasing the amount of land available for construction, nor the new measures announced for the cut-price sale of government land, will have any immediate effect. Under these conditions, there is scarcely any reason for the price of new property to fall in the coming months, except on a limited basis with a view to reducing stock.What is more, the rise in the share of social housing within future property programmes will increase the price of new accommodation aimed at investors or at middle-class buyers, as they contribute to the funding of this social housing through equalisation.

In conclusion, once the usual “wait and see” period has passed, the housing market’s development will be closely linked to the decisions of the new government and the reactions these provoke in international circles, where applicable.

Amiens2 259 €

9.6 %

Paris 8 388 € 14.7 %

Lille3 000 €-1.6 %

Rouen 2 380 €

4.3 %

annual changes, prices per sq. m.

Under 0 % 0 % to 5 % 5 % and over

ns = not significant (the volume of sales does not enable relevant statistics to be calculated)Source: property databases of the Notaires de France (the prices in Greater Paris have been calculated from the Notaires–INSEE index from the 4th quarter of 2011). Outside Greater Paris, the prices have been calculated on a median volume of 150 transactions per city and per quarter.

Bayonne2 514 €

0.6 %Toulouse2 569 €

4.4 %

Median price of new apartments in 4th quarter of 2011

Picardie3 243 €

6.8 %

Île-de-France5 022 €

9.5 %

Haute-Normandie3 189 €

4.5 %

Champagne-Ardennes3 194 €

8.0 %

Basse-Normandie3 366 € -4.6 %

Nord-Pas- de-Calais3 319 €

3.5 %

Bretagne3 109 €

4.9 %

Pays-de- la-Loire3 502 €

8.6 %

Limousin2 633 €

6.0 %

Poitou-Charentes3 187 €-21.8 %

Aquitaine3 461 €

0.2 %

Midi-Pyrénées3 389 €

0.0 %Languedoc-Roussillon

3 409 €2.6 %

Centre3 129 €

3.6 %

PACA4 080 €-5.3 %

Rhône-Alpes3 831 €

7.4 %

Franche-Comté2 721 €-0.8 %

Lorraine2 722 €

6.5 %

Alsace3 155 €

9.8 %

Bourgogne2 860 €-0.7 %

Auvergne3 105 €9.6 %

Corse2 863 €-6.0 %

Median price of older houses – Comparative statistics 2011/2010 Development over 1 year: 1 October 2011 to 31 December 2011 / 1 October 2010 to 31 December 2010

The statistics for houses cover the conurbation as a whole (city centre + suburbs)Amiens

146 000 €-10.3 %

Rouen161 000 €

-6.5 %Reims

199 000 €-0.5 %

Lille181 750 €

3.9 %

Brest 175 000 €

2.0 %

Nantes250 000 €

8.7 %

La Martinique240 000 €

29.0 %

Poitiers153 000 €

-4.4 %

Nîmes220 000 €

3.5 %Bordeaux245 000 €

4.3 %

Montauban181 000 €

-8.3 %

Toulouse268 500 €

5.3 %Montpellier302 500 €

-0.2 %

Marseille / Aix-en-Provence

310 000 €3.1 %

Orléans199 950 €

-0.5 %

Toulon350 000 €

2.9 %

Haute-Corse233 500 €

21.3 %

Corse-du-Sud360 000 €

23.3 %

Dijon236 000 €

5.2 %

Tours 191 750 €

-2.2 %

Chartres 220 400 €

14.2 %

Lyon305 000 €

2.8 %

Caen201 000 €

3.6 %

Le Havre182 500 €

0.6 %

Grenoble310 000 €

0.9 %

Saint-Étienne168 000 €

-9.5 %

Metz184 110 €

5.2 %

Nancy183 125 €

2.9 %Troyes

162 100 €8.1 %

NS

NS

Limoges131 000 €

-13.5 %La Réunion175 000 €

-1.0 %

Chateauroux106 500 €

-10.5 %

Île-de-France311 800 €

5.7 %

NOTairES DE FraNCE - # 15 - May 2012

French property

market report

annual changes, prices

Under 0 % 0 % to 10 % 10 % and over

ns = not significant (the volume of sales does not enable relevant statistics to be calculated)Source: property databases of the Notaires de France (the prices in Greater Paris have been calculated from the Notaires–INSEE index from the 4th quarter of 2011). Outside Greater Paris, the prices have been calculated on a median volume of 150 transactions per city and per quarter.

annual changes, prices per sq. m.

Under 0 %

0 % to 5 %

5 % and overns = not significant (the volume of sales does not enable relevant statistics to be calculated)Source: FPI / ECLN / CGDD / SOeS

Contact : Olivier Pavy, Head of Economic Affairs - Conseil supérieur du notariat. Editorial Board: Pierre Bazaille, Thierry Delesalle, Michel Pagès, Olivier Pavy and Claude Taffin, DINAMIC Scientific Director. Published by: Conseil supérieur du notariat - 60 bd de La Tour-Maubourg - 75007 Paris France - Tél. 01.44.90.30.00 - www.notaires.fr - Design and production : Bureau de Création - ISSN : 2100-241X

The housing indices

Find all the analyses and the press release on the Notaires de France property portal accessible at http://www.notaires.fr

France: the French price index for older houses is calculated by the Notaires de France in partnership with the INSEE. This index is published quarterly and uses the hedonic pri-cing method. The data comes from deeds of sale transmitted by notaries.

United States: the FHFA index produced by the Federal Housing Finance Agency, an American government body, measures the development of the price of private houses based on a sample of mortgages. It uses the repeat sales method.

United Kingdom: the DCLG index is the official house price index published by the British Government on the basis of a sample of mortgages. It uses the hedonic pricing method.

Between 2008 and 2011, the proportion of buyers aged 60 and over in the pre-owned property market rose from 12.3% to 14.5%, while the proportion of those aged under 30 fell, slipping from 19.1% to 16.6%.

At first sight, it would appear reasonable to attribute this to the ageing population, as the demographic data from the INSEE confirms the increase in the proportion of elderly persons. However, no fall has been observed in the numbers of young persons at national level.

Let us be more precise, as buyers are generally neither 15 nor 95 years old. If one considers the age ranges of, firstly, 60 to 75 and, secondly, 20 to 29, it would indeed appear that there has been a significant increase in the former, which has gone from 20.9% to 22.3%, whereas the second is stable at 18.7%.

These trends are not uniform across the country.. The rise in the proportion of 60 -75-year-olds is nearly twice as strong in Alsace and in Midi-Pyrénées than in Bourgogne, Champagne-Ardenne, Franche-Comté and Picardie. As for 20-29-year-olds, their presence has somewhat reduced in the West (Brittany, Limousin, Pays de Loire and Poitou-Charentes), but has conversely risen in Greater Paris, Rhône-Alpes and Provence –Alpes-Côte d’Azur.

The fall in the proportion of young purchasers can principally be explained by the adverse economic situation and the tightening up of the conditions for accessing credit. The regional demographics are in line with this, as even

though the proportions have changed little over this short period (2005-2010 for the regional variations), the share of young people buying property is contracting in western regions, where

home ownership is traditionally strong, and increasing in those regions that encompass the largest conurbations, where home ownership is more difficult.

Buyers per age group: increased presence of senior citizens

Older property (France): from 01/01/11 to 31/12/11Proportion of transactions completed by buyers aged under 30.

Proportion of transactions completed by buyers aged 60 and over.

Older apartments Houses

Source: CGEDD based on INSEE, Notary databases, non-seasonal Notaires-INSEE indexes, Freddie Mac, FHFA, R. Shiller, US Bureau of Economic Analysis, Census Bureau, Bureau of Labor Statistics, UK DCLG, UK National Statistics.Download this chart from http://www.cgedd.developpement-durable.gouv.fr/rubrique.php3?id_rubrique=138.

International comparison:property price index compared

to the income available per householdBase 2000=1

FranceUnited StatesUnited Kingdom

NOTairES DE FraNCE - # 15 - May 2012

French property

market report

Proportion of buyers aged under 30:

More than 25%20% to 25%15% to 20%10% to 15%Less than 10%

Proportion of buyers aged 60 and over:

More than 30%25% to 30%20% to 25%15% to 20%Less than 15%