The French house prices have risen by 0.9% in Q2 2014 ***. This means that they are now at 106.6 index measured relative to our inventory, which has an index of 100 in the fourth quarter of 2005.
Nykredit Markets is generally pessimistic about economic developments in France – and not least the French government’s willingness to do something about it. The French finance minister, Michel Sapin, has also just downgraded the government’s growth forecast from 1.0% to 0.4%.
Nykredit Markets continue to believe that their growth forecast of only 0.2% is more realistic, and they point out that the French government too optimistic assumption that France is in a cyclical trough, when the reality is that it is a structural decline . The decline was due not least to the French Government’s inability to implement reforms to enhance competitiveness, reduce government spending and create a new structural foundation for growth.
The French housing market remains relatively stable, despite weak growth. The structural factors that characterize the French housing market, means that the “insiders” who are already in the housing market in France, does not fall out. This maintains the status quo with respect to the prices of existing homes. Housing construction is, however, come to a standstill, but the effect was not observed in price developments.
Source: Nykredit
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