French homes are ‘most over-valued in world’

Anyone who thought they got a good deal on their dream cottage in Brittany or plush apartment in Paris, might want to think again. According to calculations made in a survey by The Economist magazine, buyers in France might have paid as much as 50 percent over the odds.

French homes are 'most over-valued in world'
A real estate agency in the 19th arrondissement of Paris. Photo: Dan Mac Guill/The Local

According to a "fair value" formula calculated by the right-leaning British magazine, French property prices are the most over-valued in the world when measured against disposal income.

According to the report, the price of residential property in France is 35 percent higher than its fair value when incomes are taken into account.

The survey also found that French homes are the most over-valued in Europe when compared to rental prices. France's property prices are considered 50 percent too high in relation to rental prices, but that is not as extreme as in Canada, where the cost-to-buy surpasses its fair value by 78 percent in comparison to rent.

The Economist is not expecting anything to change in the near future, stating any drop in French property prices will only be a modest one.

In Spain properties were calculated to be around 20 percent overvalued on both counts, but in contrast, Japanese home-buyers are undercharged by 37 percent when compared to average incomes.

Housing costs in the United States are undervalued by 20 percent against average income levels and 7 percent against rent prices, while Britons hoping to purchase a house are paying 12 percent over the odds compared to their salaries.

Many French could be forgiven for ignoring the latest Economist report, believing the British journal has it in for their country. Last year the journal dubbed France "The time-bomb at the heart of Europe," and claimed the French economy was more of a threat to the future of the Euro than Italy, Spain or Portugal.

That label was not greeted warmly by France's Socialist government, which has struggled to maintain confidence in the economy.

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MAP: Where in France can you buy property for less than €100k?

While French cities such as Paris are notoriously expensive, there are many areas outside the cities where it is still possible to buy spacious homes for less than €100,000 - particularly if you don't mind a bit of renovation.

MAP: Where in France can you buy property for less than €100k?

We decided to look at where in France you could afford a property on a budget of €100,000, and it turns out there are some bargains to be had.

There are a lot of caveats while searching for property, and many local variables in place, but our search does show some of the areas to concentrate on if you have a limited budget.

We used the Notaires de France immobilier website in August 2022, and we specified that the property should have at least five rooms (including kitchen and bathroom) and a floor space of at least 100 square metres.

We also discounted any property that was for sale under the viager system – a complicated purchase method which allows the resident to release equity on their property gradually, as the buyer puts down a lump sum in advance and then pays what is effectively a rent for the rest of the seller’s lifetime, while allowing them to remain in the property.

READ ALSO Viager: The French property system that can lead to a bargain

For a five-room, 100 square metre property at under €100,000, you won’t find anywhere in the Île-de-France region, where the proximity of Paris pushes up property prices. The city itself is famously expensive, but much of the greater Paris region is within commuting distance, which means pricier property. 

Equally the island of Corsica – where prices are pushed up by its popularity as a tourist destination – showed no properties for sale while the region of Provence-Alpes-Côte d’Azur – which includes the French Riviera – showed only 1 property under €100,000.

The very presence of Bordeaux, meanwhile, takes the entire département of Gironde out of this equation – but that doesn’t mean that the southwest is completely out of the running. A total of 25 properties came up in the Nouvelle Aquitaine region. One property was on the market for a mere €20,000 – but it was, as the Notaires’ brochure noted, in need of “complete renovation”.

Neighbouring Occitanie, meanwhile, showed 12 further properties in the bracket.

By far the most properties on the day of our search – 67 – were to be found in the Grand Est region of eastern France. The eastern part of France overall comes out best for property bargains, with the north-east region of Hauts-de-France showing 38 properties and and Bourgogne-Franche-Comté displaying 25.

Further south, however, the presence of the Alps – another popular tourist destination – pushed up prices in the Auvergne-Rhône-Alpes region which showed just three results.

The below map shows our search results, with darker colours indicating more cheap properties.

Property buying tips 

In order to make a comparison, we focused our search on properties advertised online, but if you have a specific area in mind it's well worth making friends with a few local real estate agents and perhaps also the mayor, since it's common for properties not to be advertised online.

Most of the truly 'bargain' properties are described as being "in need of renovation" - which is real estate speak for a complete wreck.

If you don't mind doing a bit of work you can often pick up property for low prices, but you need to do a clear-eyed assessment of exactly how much work you are willing and able to do, and what the cost is likely to be - there's no point getting a "cheap" house and then spending three times the purchase price on renovations.

READ ALSO 'Double your budget and make friends with the mayor' - tips for French property renovation

That said, there were plenty of properties at or near the €100,000 mark that were perfectly liveable or needed only relatively minor renovations.

You also need to pay attention to the location, as the sub-€100,000 properties are often in remote areas or very small villages with limited access to amenities. While this lifestyle suits many people, bear in mind that owning a car is a requirement and you may end up paying extra for certain services.

Finally remember that government help, in the form of loans and grants, is available for environmentally friendly improvements, such as insulation or glazing.