This article in the Times, looks at how France’s property market is continuing to rise, and how this market buoyancy is due, in part, to Macron’s entrepreneurial lure and wealth tax changes
A recent article in The Times, featuring Home Hunts, looked at how President Macron’s tax reforms are luring the wealthy back to France. In Paris, where apartment prices average €8,940m2 and increased by 7.8% over a twelve-month period to 30 September 2017, the market is thriving and many estate agents are putting this down to Macron’s influence and tax reforms.
Macron made Paris the go-to economy in Europe
“There are a number of reasons that the Parisian market is doing well, but first and foremost it is down to Macron,” explained Roddy Aris, an associate in Knight Frank’s French property team, to The Times.
“[The former president François] Hollande caused a mass exodus of wealth from Paris to London and Brussels. Macron is the opposite to Hollande. He is young, entrepreneurial, statesman-like, business-friendly – and France is being seen as the go-to economy in Europe. Paris is taking over the mantle, from London, as the politically stable hub of Europe at a time when London is losing its shine, with Brexit and the uncertainty that has created.”
The “Macron effect”, a name given to the positive outcome and confidence in France following the French President’s election, enhanced the recovery of France’s property market countrywide in 2017. So much so that it returned to levels that it peaked at just before the financial crisis in Europe in 2006.
Paris property first for price growth
Knight Frank’s prime global residential forecast for 2018 lists Paris in the number one spot, with a price growth of 9% expected in 2018. As a result, global investors from the US, Middle East and Europe are expected to flood back into the capital city.
Home Hunts observes that there has already been a significant increase in foreign investment in France’s property market.
“We expect prices to rise by 8-10% in big cities such as Paris and Bordeaux, because of the huge amount of interest from local and international buyers – a particularly from the US, UK and mainland Europe,” explained Tim Swannie, Director of Home Hunts, to The Times.
A favourable change to the wealth tax (which reduces residents’ tax liability) on 1 January 2018 has boosted President Macron’s popularity and the property market.
The tax changes
The Times article explains how “since the beginning of the year, wealth tax has been replaced with a property wealth tax, which is only applied to equity in property and not to total assets, as had been the case – with a 30% discount on the value of a main residence”.
It reports how there is also a new flat tax rate of 30% for income and capital gains and that over the next three years residence tax (“Taxe d’habitation”) is being “phased out and will be abolished for all eligible households in 2020” and adds that “the tax will remain on second homes”.
With these kind of price increases expected, yet with house prices in many parts of France still at attractive levels and mortgage rates low, Tim is encouraging buyers to invest in French property before prices increase more.
Attractive property prices due to rise
“With house prices in France still at appealing levels and the banks offering low interest rates, the French property market is currently offering many valuable investment opportunities,” says Tim. “With the renewed confidence from British buyers that Brexit won’t affect their enjoyment of a holiday home or new life in France, and more global investors expected to flood into the prime property markets, now is the time to find a lucrative investment property.”
If you are looking to buy a luxury property in France, you can search Home Hunts’ online portfolio at www.home-hunts.com, but if you need to discuss your particular requirements with a property specialist, call Home Hunts directly on +33 (0)970 44 66 43