Financial crisis impacts housing market on the Côte d’Azur

The statistics presented by FNAIM confirm that the activity in the housing market has diminished by 15-20% in the last year. A downward turn not seen in the Alpes-Maritimes since 1998. As Jérôme Renaud confirmed, “the situation is serious”.

Whilst some smaller towns such as Antibes, Cagnes, Le Cannet and St. Laurent du Var have seen a continued rise in prices over the last year, Cannes and Nice have seen drops of 2% and 0.9% respectively.

However, the last quarter has seen a drop in house prices by 1.14% in Antibes, 0.41% in Cagnes, 1.35% in Nice, and 2.78% in Cannes. Only the towns of Le Cannet and St Laurent du Var saw an increase in prices, of 0.33% and 1.49%.

Mr. Renaud of FNAIM predicted a national decrease of 10% over the next year, but admitted that in the current climate, and the nature of the market itself, it is very difficult to predict with any certainty what the future holds.

He was, however, reassured by the condition of the housing market on the Côte d'Azur when compared to the national average. There are, he said, some "resistance factors" that should allow the market to continue in a stronger state than nationwide. The area is very attractive to buyers, and the high birthrate in the department should ensure some dynamism remains in the market. He also stated the constant lack of available housing as a factor that could help to keep the market strong, as demand should remain high. He also pointed to the behaviour of French banks in the preceeding years. Whilst their counterparts in other parts of the world are suffering, French banks remain relatively stable and should "act as a parachute in this period of crisis".

Mr. Renaud was adamant that the situation is not a crisis in the housing market itself, but that estate agents are feeling the impact of a wider, more profound crisis. Whilst there is still a large amount of potential buyers, it is the lack of finance and credit available to them that is impacting the number of house sales. Half of potential buyers are being refused credit by banks he said, adding that there have even been instances where a bank has agreed to give credit, before withdrawing their offer after the 'compromis de vente' had already been signed.

The situation for estate agents is worsening, due to the downturn in the number of sales. Mr Renaud admitted that ten FNAIM offices will close by the end of the year, the majority due to the crisis, and expects there to be serious consequences for the 4000 people employed in the sector in the Alpes-Maritimes. "5-10% of our members are in difficulty" he revealed. He also portrayed some worries for peripheral sectors, such as construction, architects and Notaires, who will all be impacted by the downturn in sales.

There are some areas that will remain largely untouched by the downturn, such as La Croisette in Cannes, the Old Town in Antibes and the Promenade des Anglais in Nice. These area, always high in demand, should feel the heat less than others. With regard to sellers, Mr Renaud confirmed that they are still not psychologically ready to admit that the value of their property is reducing, and many would rather remove their houses from the market than accept a lower price. It is the role of estate agents to negotiate and provide expert advice to both vendors and buyers, he added.

The rental sector, on the other hand, continues to grow. The Côte is the second most expensive place to rent property in France, after Paris, and the continued rise in rent has created a certain amount of "tension in the market", although Mr. Renaud expects prices to drop steadily in the next year.