Free Republic
Browse · Search
Topics · Post Article

Skip to comments.

EU: France faces 40pc house price slump
The Telegraph ^ | 5/3/2012 | Ambrose Evans-Pritchard

Posted on 05/05/2012 12:47:17 AM PDT by bruinbirdman

France faces a property slump of Anglo-Saxon proportions as the frothiest boom in French history finally tips over, threatening the country with an economic shock just as austerity hits.

"It is a gigantic bubble, all the more dangerous as it is spread across France," said Pierre Sabatier, from the consultancy PrimeView.

"It reached a paroxysm in the summer of 2011. There is a mix of incredulity and denial as it starts to burst but there can be little doubt that all levers propelling the market are disappearing."

PrimeView said prices across France have jumped 160pc since 1998, though houshold incomes are up just 35pc. Paris has overtaken New York to become the world's third costliest city at €18,000 (£14,600) per square metre.

The boom seemed to defy global gravity last year as southern Europe and the US battled property slumps. The mood has since darkened. "A number of clients tell me they think the market has topped and want to get out," said one French hedge fund manager.

Standard & Poor's has told investors to brace for a 15pc correction. Credit Agricole says prices may fall 12pc by the end of next year, expecting a "gradual slide" that could last until 2016.

House prices versus disposable income in France

PrimeView thinks it will be much worse. The price-income ratio was stable from the 1960s to the late 1990s, before exploding over the past 12 years as a perfect storm of demographics, state sweetners and cheap credit led to a 12-year blow-off.

There are parallels with Spain and America but Mr Sabatier said the French twist is a replay of the early 1930s when investors fled stocks after 1929 and rotated into "safe" property. Hence the paradox of rising prices during the Depression. The strange boom did

(Excerpt) Read more at ...

TOPICS: Business/Economy; Crime/Corruption; Government; News/Current Events

1 posted on 05/05/2012 12:47:27 AM PDT by bruinbirdman
[ Post Reply | Private Reply | View Replies]

To: bruinbirdman

40 percent? I’m surprised that France didn’t emulate our US commie freeze at every level of banking and government against foreclosures for the political/regulator class.

2 posted on 05/05/2012 1:04:07 AM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
[ Post Reply | Private Reply | To 1 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794 is powered by software copyright 2000-2008 John Robinson