Why low interest rates in France does not mean it’s a great time to buy a French property?
At Anh Thomas Investment we have many French clients. As you might know French investors tend to avoid stock markets and instead focus on real estate investments especially their local ones. Many French people do not speak English properly and investing abroad is generally perceived as being a dangerous move.
So we often have our French clients asking us if buying a property in France would be a great idea. We currently see the French property market as being overvalued especially in Paris.
In France it is possible to borrow money at a fixed rate for a 25 years period. With interest rates being at record low levels, many people simply assume that it’s a great time to borrow money to buy a property. Unfortunately things are a bit more complex. Contrary to banks in the Anglo Saxon world, French banks mostly offer loans with fixed interest rates. Many people think that because you can buy at very low and fixed interest rates there is no better time to buy a property. However, if interest rates go higher (and they will at one point) in the future what will happen is that new investors will not afford to take on huge loans anymore and prices will naturally adjust by falling. In other words, in a low interest rates environment, property priced tend to be high while in a high interest rates environment, property priced tend to be low. In any case, at Anh Thomas Investment we believe that there are little if any better investments than investing in the Vietnamese stock markets.