* Property prices dip 0.3 pct q/q in Q4
* Analysts see prices falling this year and into next
* Paris property prices steady
By Leigh Thomas
PARIS, Feb 28 French property prices fell for a
fifth straight quarter at the end of 2012, data showed on
Thursday, and look set to keep on falling over the next two
years as a weak economy and rising unemployment depress demand.
Housing prices fell 0.3 percent in the final three months of
2012 from the previous quarter, the INSEE national statistics
agency said on Thursday. Compared with a year earlier, prices
dropped 1.7 percent, the fastest decline since the fourth
quarter of 2009 in the wake of the global financial crisis.
With the market looking increasingly shaky, buyers and
sellers held back from going through with deals in the fourth
quarter of last year and the number of transactions plunged
nearly 12 percent from a year earlier.
Property prices in Paris, which has long outperformed the
rest of France due to strong foreign investor interest and a
shortage of housing to meet growing demand, were largely stable
in the fourth quarter.
Prices in the capital have surged 95 percent in the past
decade, while property prices across France have risen 71
percent, according to Thomson Reuters Datastream.
After a short-lived slump during the financial crisis,
French property prices quickly rebounded but began falling again
in late 2011 and the downturn looks set to continue.
Standard and Poor's and Morgan Stanley both forecast prices
will fall 5 percent this year and again next year, while UBS
sees prices dropping as much as 10 percent in total with most of
the slide coming this year.
A lack of suitable housing in key markets had long
underpinned the rise in house prices. However, a faltering
French economy, which contracted in the fourth quarter and could
be heading into recession, and unemployment of above 10 percent,
are increasingly holding back would-be home buyers despite
record low mortgage rates.
In the face of weak demand, construction activity is
collapsing and housing starts dropped more than 28 percent in
the last quarter of 2012 from the same period of 2011, according
to housing ministry figures.
Hoping to remedy low housing supply, President Francois
Hollande has set a target for 500,000 new homes to be built each
year during his five-year term which ends in 2017.
Hollande's government has lifted the limit on hugely popular
tax-free saving accounts, whose funds are channelled by banks
into state-backed CDC bank and then used to finance social
housing. The government is also looking at tax incentives to get
life insurers to steer more money into housing investments.
(Editing by Susan Fenton)