A recent batch of housing market reports all suggest the motor is running out of gas, but not everywhere it seems.

It hardly comes as any great surprise to hear from the French estate agents that sales activity has slowed in recent months.

In their latest review of the market, FNAIM, the national association of estate agents, state that sales are down by 15% in the second quarter over the same period last year; the national chain Century 21 report a similar fall of 17% over the past year, while the Laforêt group of agents say sales have fallen by 11% in the second quarter over the same period in 2011.

Although there can be little doubt that the global financial crisis is setting the scene for such falls, the agents also points to a number of more prosaic factors:

• The impact of the abolition of the interest free loan (PTZ) for older property in the number of first time buyers;
• The reluctance by existing owners to accept any significant reduction in the asking price of their property;
  
• A toughening of credit conditions from the banks, despite the lower interest rates available;
• The reduction in the fiscal advantages available to investors, as well as the toughening of tax rules on capital gains.

So for once it seems the estate agents are all in agreement.

Well, not quite, because according to Jérôme Bost the marketing director at ERA chain of estate agents, "it all depends over which period you are making the comparison".

He reminds us that it was a record year for sales in 2011, which continued into the first quarter, as buyers sold before the new capital gains tax rules came into force.

"Over a year it’s true that the number of sales has declined by around 15%, but if one compares sales in the first half of the year with the second half of 2011, then the fall is only around 5%", he says.

‘Moreover", he continues, "the fall in sales mainly concerns studio and 1 bed apartments which have been most affected by the abolition of first time buyer interest free mortgages and by the abolition of tax breaks on investment properties. If these properties are removed from the equation, then the slowdown is little more than the usual ‘wait and see’ approach that normally occurs in an election year".

A similar view is expressed by Phillipe Taboret of mortgage brokers Cafpi, who says that "after a slow first quarter, the second quarter picked up a little in April and May and activity was strong in June".

So although it seems that sales are falling, there remains a lack of agreement amongst the agents on the scale and nature of the downturn.

Prices

Be that as it may, there does at least some broad agreement that prices have remained stable.

The agents argue that a 'vicious circle' is happening, where existing owners, not themselves able to buy on a discounted basis, are then unwilling to reduce the sale price of their own property.

FNAIM consider there has been no real change in prices for the past nine months, following two years of price growth in 2010 and 2011.

Neither, they argue, during the second quarter did even Ile de France prove the exception, as prices also stagnated in this region, after successive periods of upward growth in recent years.

The Ile de France region now remains the only one in France where house prices remain above those of 2007, due to falls that occurred elsewhere during 2008 and 2009 and the immutable character of prices since this time.

Beyond the Ile de France, FNAIM consider that that the only significant downward movement in prices at a regional level occurred in Nord Pas de Calais (-5.9%) and Brittany (-4.3%), while one region even reported a measurable increase in prices, that being Aquitaine (+1.6%).

The Laforêt group, with 750 branches nationwide, point to a similar picture, with prices only falling on average by 0.4% in the last quarter over Q1. They argue that the big reduction in prices took place at the start of the year, when prices fell by around 5%, and that a further decline in the second quarter was cushioned by attractive rates of interest.

That prompted Laurent Vimont, president of Century 21 to comment somewhat optimistically that "this might indicate that the worst is already behind us".

A similar view is expressed by Century 21 who state that prices only fell by 0.4% in the first half of the year over the second half of 2011, but that over a year prices had fallen by 2.6%.

However, scratch beneath the surface of the headline figures and it is clear there are the usual significant local disparities, as the following table from Century 21 shows.

The table does have some limitations, notably that the figures are for both apartments and houses combined, and for dwellings averaging in size less than 100m2. So it does not properly reflect the change in prices in larger country properties. However, it is the best we have at the present time.

Source: Century 21

Of the 20 regions in the table, 15 show prices decreases in the past six months, while 5 regions actually saw prices go up. The largest rise in the past six months was in Champagne-Ardenne (+4.4%), while in Poitou-Charentes prices fell by a whopping 13.8%.

These are some big differences in the market, and once you factor in more local variations of rarity and quality, then it is clear that broad average figures need to be used with great caution. The only significant conclusion that can be drawn is that the trend is downwards.

In addition to reports from the estate agents, Credit Agricole also recently issued their latest review of the market.

Although they continue to argue that house prices are substantially overvalued, they do not consider that a collapse in prices is likely.

"The demand for housing will fall", says Olivier Eluere, housing economist at Credit Agricole. "But it will not collapse, because the specific structural characteristics of the French property market continue to have a positive effect, notably due to its 'safe haven' status. We are moving more towards a correction, rather slow and gradual, which could last three to four years".