House prices in France continued to fall in 2014, but there are growing differences between town and country.

Last month FNAIM, the national association of French estate agents, published their review of the year, even before the year itself was out!

They reported that house prices fell by an average of 1.5% in 2014, but with the usual significant variations across the country, about which there was precious little detail.

Although overall FNAIM stated that activity levels remained broadly the same as that for 2013 (around 720,000 sales), volumes were only maintained due to continued strong activity in the main cities and tourist areas of the country. In many smaller towns and rural areas sales were substantially down.

As Bernard Desbieys, President of FNAIM Aquitaine, stated of the region: "It is mainly the Bordeaux metropolitan area and coastal towns such as Biarritz and Hossegor that are driving the market upwards. In the Dordogne, Lot-et-Garonne, or inland Landes, prices and sales volumes are down significantly."

The differences have also deepened between the best and worst properties, with buyers taking their time to find the right property. Properties with substantial defects or other unfavourable characteristics remained unsold.

In addition, in the more expensive areas of the country it was smaller properties that sold over larger homes, one reason, it seems, why activity levels were maintained.

Beyond the FNAIM consolidated analysis, a number of the larger national agents have also published their own annual review, all broadly singing the same refrain about the national picture, but with divergences in the local analyses.

First up were the Guy Hoquet group, who reported that regional house prices fell by an average of 2.2% in 2014.

They were followed by Century 21 who stated in their annual review that prices fell by an average of 2.8% in the year.

Last out were the Laforet group of estate agents who reported a fall of 3% in regional prices outside of Paris.

Such is the lack of alignment in the regional figures between the agents, the only conclusion that can be drawn is that the trend continues to be downwards, with the relative price stability of sales in the main cities disguising larger falls in more anemic rural areas.

The following table compares the regional figures provided by FNAIM, Century 21 and Laforet. Perhaps wisely Guy Hoquet did not publish a regional analysis.

On the upside the agents state that the actual number of potential buyers increased significantly in the year, as did the number of visits to properties for sale. Buyers simply adopted a wait-and-see attitude and were looking for a bargain.

The notaires have yet to publish their analysis of 2014, but for the third quarter the average annualised national price fall was still under 1%.

Nevertheless, once again, according to Thierry Thomas, president of the Institut notarial du droit immobilier, there were significant falls in certain rural areas and smaller towns, but he offered little indication of just where these large falls occurred. We will provide information on the notaires market report for 2014 when it is published in a few months.

Outlook

Most real estate professionals agree that the housing market this year is expected to remain on the same trajectory as that of 2014. Volumes will stabilize, with prices still down slightly, resulting in resistance in the most dynamic areas, but with some pronounced falls elsewhere.

FNAIM forecast average falls of between 2% to 3% this year, in line with similar projections from the main estate agents. Prices on average are now at the levels they were in 2007.

Leading economists Xerfi predict a fall in prices averaging 1.5%, which takes their overall fall to 5.5% over the past five years (2012-2015). They consider this to be a modest fall, given that prices have increased by around 150% over 19 years.

Over the same period living standards have only increased by 73%, so many households, notably younger families, are finding it difficult to obtain access to housing. Whereas in 1998 around half the population could afford to buy a property that met their requirements, now only 27% are able to do so.

If the economists do not predict a big fall in 2015 it is in large measure due to favourable interest rates, which they consider will remain low. Indeed, with average interest rates now around 2.5% (excluding insurance) they consider they could fall further to 2%.

Nevertheless, as housing economist Michel Mouillart of the Université Paris Ouest points out, the impact of these lower rates will continue to be neutralised by high unemployment and economic stagnation.

His comment adds weight to the caveat expressed by FNAIM in their forecast: "In those areas where there is little or no economic activity, the market will continue to sink."