The revival of rural homes in France
Last year, transactions involving rural houses increased by almost 15% to €6.6 billion. The market is getting better, but is still mixed. Farmland rose by 1.4% to €5.230 per hectare (£5,000 for 2.47 acres). Is the rural exodus coming to an end after decades of influx towards cities?
“The housing market in the countryside was more active in 2010 with 34,000 transactions, or 14.9% more than in 2009”, underlines Robert Levesque, manager of a company dealing with the rural land planning board. This organization published a study on the rural land market which revealed that the average price of assets acquired amounted to over €190,000 for a 7,300-square meter area, land included. “The housing market in the country is fueled by former farmhouses and former farms sold with adjoining land”, says Robert Levesque. People are increasingly interested in the renovation of old buildings in the countryside. It has become a new lifestyle in real estate.
Overall, land transactions reached 6.6 billion Euros (5.8 billion pounds), or 43% of the overall land market (15 billion Euros). For the fourth consecutive time, they’ve overtaken the urban market (3.6 billion Euros) and the agricultural one (3.5 billion Euros). These were negotiated on average at 5,230 euro per hectare in 2010, which is a slight increase of 1.4% over a year. However, “the countryside is still playing an essential role in a crisis period”, says André Thévenot, president of Safer’s National Federation. Since 1997, this growth has been far more dramatic: +65% for open lands and +35% for leased lands.
Regarding the sales of French houses, there are two buyer profiles:
– Young workers: as they can’t afford a house (often an apartment) in town centres, they opt for accommodation in the countryside close to dynamic areas (where jobs can be found). Generally under 35, young workers have made the most of the decrease in interest rates to become owners.
– People in their fifties: they invest in rural areas because they have a sufficient budget to purchase a second home, maybe in anticipation of retirement.
Rural property has several components:
Near cities, prices are driven by the purchases of young people. But it’s not looking rosy everywhere yet. “Today, in many rural areas, second homes are struggling to sell. The buyers are missing and, in some areas, we can still talk of a certain lethargy like in Normandy and some parts of Auvergne”, reports Mr Bazaille, president of the National Institute of Real Estate. Even though these purchases were strongly hit by the economic crisis, a shy but existing recovery can be spotted. Although they fortunately increased last year, rural property has not yet reached the prices of 2007.
What would be the consequences of a significant rise in interest rates?
The experts do not rule out a Safer reversal of the rural estate market as in 2008 (-4.3%) and 2009 (-10.2%) after eleven years of uninterrupted rises since 1997. Interest rates have been rising since late 2010…