While we all expect properties to fluctuate in value, no-one wants to buy a home and see it fall in value over the long term. So, no matter how entranced you are with any property, it’s prudent to check that the factors that support its value are in place.
Most buyers know the names of those fundamentals. Housing markets work in the same way as every other market. They obey the laws of supply and demand. So, where demand for housing is high and supply is limited – such as many big cities and bijou resorts – prices are high. The opposite is also true. Places where people are leaving, so demand is relatively low and supply is relatively high, prices are low or falling.
Simple, right? Not quite. You also need to know the factors that drive supply and demand. Most importantly, you need to know those factors for the specific area you’re interested in. If you’re a potential buyer you need to know the prospects for property prices for Normandy in general and Calvados in particular. For those who just want the answers to that question I’ve summarised my conclusions below and you can stop reading in 1 minute. For those who want to see how I arrived at my conclusions, you can check the data I based them on in Blogs 2 and 3. That will take you another 3 minutes each.
And one more thing: Don’t deceive yourself! It’s easy to compare nominal house prices and think that houses in France cost less than they would at home, so they’re better value. You need to look at ‘real’ house prices and real affordability. In other words, you have to take inflation into account. Yes, houses in France are better value but not as much as you think. France too, has inflation.
MY PROPERTY PRICE OUTLOOK FOR NORMANDY
So, what’s the outlook for Normandy? These are my conclusions.
- Property prices per metre2 are likely to remain stable at the current level in this area of Calvados. The median selling price/m2 was 2,230€ at the close of 2023 for houses in Calvados. Why will they remain stable? First, 1980 – 2010 saw the main populationgrowth across France. That fuelled property price rises. Since then, population has been flat in every region of France and there is nothing that is likely to alter that outlook at present. Second, interest rates across the Eurozone remain high and these rates have depressed property prices because people, especially younger people, have trouble getting credit. One estimate is that mortgage lending fell around 30% across the EU in 2023. So, right now, in 2024, represents the low level. My expectation is that prices will remain at this level until interest rates fall. That may be some years, not months, into the future for the EU in general,
- However, property prices in Normandy are likely to rise in the longer term. Properties in most areas are good value for money. France as a whole has seen has seen prices rise 126% since 1966. The UK has risen 145% over the same period. But value-driven property prices alone are not a sufficient inducement to encourage more people into an area. If they were, people would be flocking to Romania and Bulgaria. The possibility of well-paid jobs, good public services and schools are also essential ingredients which Normandy offers.
- Could property prices rise significantly? Not any time soon, in my view. But, if the authorities were to bring France into line with its European neighbours, by easing credit restrictions, there could be a step-change upwards in property values. That doesn’t seem likely at the moment but shouldn’t be entirely dismissed.
- If you are buying, detached houses are a better option. Covid raised the preference for housing with personal outside space. People learnt that ‘lockdown’ was more bearable in a spacious detached house than in a high-rise, no matter what it’s location.
- Finally, and this is a long shot, if you have space for development there might be an emerging market for office services, to support ‘work from home’ businesses.Meetings rooms, tech support, and presentation facilities might be an alternative or add-on to gites and B&B.
