The State of the Market

the market THE STATE OF

By gareth jefferies

Marketing Director at alpine-property.com

I’m writing this report during the second week of May 2021 and this is important to know because, thanks to the rapidly changing property market right now, these market reports need updating weekly! We are currently in the middle of an extremely active market and whether or not this is a bubble that is about to burst is not something anyone will know. Changes on the horizon could make the market even hotter. But I’ll come back to those!

The winter that never was - or was it the winter of our future? All our bars and restaurants remained closed for visitors, all the ski lifts remained closed for recreational skiers. However, the peak holiday weeks seemed just as busy as ever. The carparks and the roads seemed full and the mountains were covered in people cross country skiing, hiking, hiking up to ski down, hiking with snowshoes, sledging and riding bikes on the snow. It really did show us that people still appreciate the mountains for what they are, and can deal with the lack of lift assisted skiing. As I utter these words I will be drowned out by howls of protest from the ski industry, and that’s because that is where all the money is. I’m not disputing that. The other big event that has happened since I wrote my winter market report for Morzine Source Magazine is Brexit. If there has been an effect on the property market from Brexit, we’ve not felt it yet. Any change has been swamped by COVID. Some of our Britishbased customers are buying via virtual visits, but they are in the minority as the vast majority of our sales are in the French market. New enquiries from Brits are about the same as usual yet French enquiries are swamping them 2 to 1 at the moment.

“Changes on the horizon could make the market even hotter.”

Brexit has made a couple of changes generally, however. It is now much harder to come to France to work, yet that hasn’t really affected the property market. You can

still retire to France if you have a good pension, you’ll have to apply for a Visa though and take out health insurance. The main change is for someone based in the UK who is selling their property in France. If your property has gained in value and capital gains tax is due, then this has gone up almost 10% (from 26.5% to 36.2%). A UK-based seller will also have to pay for a fiscal guarantee that can be up to 1% on the total sale price. And just let me clarify, these extra selling costs are not just aimed at the British - it’s the same for all residents of a non-EU country.

Overall the lower demand from British based customers has been more than replaced by French buyers. Our new enquiries are up 30%, month on month, every month since last May and that’s a figure being matched by property sales. It is the same phenomena all over the world. People are looking to move out of the cities and we live in a lovely part of the world that benefits from good transport links. The upshot of all this is a reduced supply of properties. When demand outstrips supply it can only mean that prices will increase.

“The winter that never was - or was it the winter of our future?”

We monitor a couple of sales figures. The primary one is average property prices. Over the last 10 years we have seen between a 20 and 30% increase in property prices, depending on the type of property and the area. However, over the last three years they have been fairly flat across the board. In the last couple of months we have been feeling a definite upwards pressure on prices. It depends on the property, but I think we can easily speak of a 5%, or even 10% increase in property prices, and sometimes more.

In France if an offer is made at the asking price, then the owner is contracted to accept it. And once the first contract (compromise de vente) is signed, then this locks out other offers. This should mean that gazumping does not happen. It also means that “offers over” or sealed bids don’t exist. This alone can put a brake on rapid price inflation.

So will this surge in interest continue? Who knows. Very little of what I predicted a year ago has come to pass. There are other factors at work too. Higher interest rates? Negative interest? Inflation? One thing we do know however, is there remains a lot of pent up demand in the UK and these people will visit at the first opportunity. We hope that this will be soon. Governments are talking about June but obviously it will depend on the ongoing health situation. When this happens it will just add to the demand and consequently we don’t expect a slow down in the market any time soon.

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