The local paper Nice Matin is reporting that the Nice property market has really begun to take off again after a lethargic 2014, as reported here (French).
Prices dropped overall over 1.5% last year with a relatively low volume of transaction. The drops in certain quarters on the outskirts of the city hide the fact that in-demand areas continued to modestly rise, such as the Old Town and the Carre d’Or. The reports and statistics closely match what we have seen on the ground here. Our demand for mid-range and high-end properties were low, however smaller properties €150,000 – €250,000 were being snapped up with supply not able to keep up with demand.
The factors behind this are quite clear. Volume was low last year as banks were giving only up to 80% mortgage, and preferring to give short 15-20 year loans. This kept the lid on mortgages with most first time buyers unable to get a loan, and families looking to upgrade finding it hard to raise the down-payment in a difficult economic climate.
This lower demand was counter-balanced in the historically good buy-to-let areas by the large amount of cash buyers looking for a good return whilst bank interest rates are at a historic low. There has been a virtuous circle as the number of properties to rent out has sucked in more tourists looking to rent here via sites such as AirBnb.
In 2015 prices are now up 2.5% from March 2014 – March 2015, already more than wiping out the dip from last year and we are only in the first quarter. The volume of transactions is up 5% in the first quarter alone, making it up 10% over the year to date.
There are a couple of strong reasons for this. First is the currency with both British sterling and American dollar performing strongly against the euro. The pound in particular has increased from a low of 1.08 to a high not long ago of 1.42. For British investors, buying now is tantamount to having a 30% discount.
The second reason is the banks loosening their lending and starting to offer 100% mortgages again, coupled with historically low interest rates. This means more fluidity in the local market allowing volume to rise. Again the reports tally with what we are seeing, with a far greater spread in the range of budget of our clients.
We expect property prices to increase this year but more interesting is the increase in volume. During the property boom our clients were more concerned with capital appreciation. These days the questions are more about ROI.
However there is a third factor which nobody has caught onto yet. More volume means more choice for buyers, which means those looking to buy a holiday home in Nice are more likely to find the home of their dreams. We are now getting in some unique properties that we would never had on our books the past few years. With good exchange and interest rates, now is the time to start looking.