After years of record-low interest rates, and a booming property market, investors are now asking the natural question: “Is it wise to invest in property when interest rates have risen to 4%?” Here are five compelling reasons why real estate should play a central part in any investment portfolio, and buying property in France remains a prudent financial decision.
It embraces long-term investment
Just as astute investors carefully evaluate potential returns before making a move, prudent homebuyers should adopt a similar mindset. While a 4% interest rate may seem daunting initially, it pales in comparison to the enormous benefits of property ownership (and we don’t just mean having a home over your head). Investing in real estate allows buyers to profit from long-term capital appreciation and build equity over time, laying a solid foundation for future financial stability and for future generations. Passing property on to your children and relatives allows them an early foot on the property ladder.
Amidst the fluctuating tides of the real estate market, long-term stability reigns supreme. Despite variations in interest rates, the housing market has consistently demonstrated resilience. Historical data highlights real estate investment as a reliable choice, even in the face of economic and political turbulence. The inherent demand for housing ensures stability and underlines the enduring value of real estate as an investment. The chart below, of French property price growth (black line) since 1965 demonstrates this perfectly.
Diverse Financing Options
A rise in the “taux d’usure” effectively increases French mortgage lenders borrowing latitude, encouraging them to lend further. While interest rates may be higher than in previous years, there are opportunities to secure favourable terms. Using a broker, negotiating with your long-standing bank, or exploring government-backed loan programs can provide alternatives that align with individual needs. Having your financing in place allows you to know your limits and puts you in a strong position to negotiate the purchase price.
Beyond the potential capital growth, real estate ownership offers substantial tax benefits. Deductions on mortgage interest payments, and in other areas, significantly reduce the overall tax burden, strengthening the buyer’s financial position. By investing in property, buyers unlock a range of tax advantages that help build overall wealth. VEFA (new-build property) in particular can be extremely tax efficient. (See our guide to buying VEFA property here)
The Intangible Value of Homeownership
As they say across the channel “An Englishman’s home is his castle”. It serves as a personal sanctuary and a haven from the chaos of the outside world. It provides stability, a sense of pride, and the freedom to create a unique living space that is personalised to your needs. Remember the feeling when you walked into your first property? Of course you do, we bet that you don’t remember the interest rates at the time though! The decision to buy property transcends mere numbers, it addresses the innate human need for security and a place to call one’s own.
There we have it. We believe that by embracing the long-term perspective, recognising market stability, exploring diverse financing options, leveraging tax benefits, and acknowledging the intangible value of homeownership, bargains remain to be had. This astute and wide-seeing approach ensures informed decision-making, and will allow you to take your first steps towards financial prosperity and a place you can truly call home. Have a look at our buyer’s guide here.