Property prices in France continued to remain flat during the first quarter of 2007, although the picture is a gloomier one in the South-West, according to the latest house price survey from FNAIM, the estate agents' professional body.

Over the past twelve months, house prices on average rose 6.3%, the slowest recorded rate of growth for nearly ten years. This figure also disguises a stagnant picture over the past six months, so almost all the growth occured in the first half year.

At a regional level, the South-West seems to have fared worst, with prices there having remained stable over the past twelve months, now actually in decline.

The FNAIM figures are a little more favourable than those from the Chambre de Notaires, which showed prices in the Ile de France and the Rhône-Alpes dropping slightly in the final quarter of last year, the latest date for which their statistics are available.

It may well be, therefore, that the estate agents are putting putting a brave face on things, for there is evidence of a widespread slow down in activity, with too many properties chasing too few buyers in most parts of the country.

One of the reasons for this surplus has been the massive house-building programme that has taken place over the past two years, and which appears to be undermining the existing homes market. The government seems committed to trying to maintain a large building programme for the next few years, so its effects may well continue to be felt.

However, it does appear a slowdown in new build activity has already started, as new construction starts were down by 15% in February over the previous three months, and it now seems likely there will be a sharp decline in the number of new properties built this year in comparison with the programmes of 2005/6.

Whilst credit conditions remain favourable and there continues to be good economic growth, few are yet predicting a market crash. Current house price forecasts for 2007 range from -2% to +5%.

FNAIM continue to forecast price growth of 3% to 5% and, whilst the Chambre de Notaires forecasts low or zero price growth for this year, they are not fatalistic about the outlook for the market.

One of the noticeable structural changes that has taken place in the French housing market in recent years has been the growth in the number of young people intent on buying into the market.

In a survey carried out in 2002, only 10.7% of those aged 18-30 years planned to buy in the near future, whilst in the same survery in 2006 that figure had risen to 31%. (Meilleurtaux.com)

It does seem, therefore, that with nearly a decade of consecutive house price increases, the French youth have finally decided they need to get an early foot onto the property ladder.