Paris Property Continues to Appreciate...Will the Coronavirus Have an Impact?
French Property Insider Volume XVIII, Issue 9 Thursday, February 27, 2020 • Paris, France
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Property Relocation Services: Long Term Rental Apartments
Long-term rental apartments” are any furnished or unfurnished apartments available for rent from 1 month to 3 years. Apartments in Paris of this kind are difficult to find and even more difficult to secure – even for the locals.
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I'm on the train to Nice as I write this, which was intended as a Carnaval weekend. Sadly the annual event in Nice and the Fête du Citron in Menton have both been cancelled due to the Coronavirus scare. The latest news is that some cases have been detected in several countries in Europe linked to the outbreak in Italy. Italy is seeing the worst of it, so far. With Menton on the border of Italy, it was doomed.
This does not stop me from going to Nice, but must admit, I've never seen the Gare de Lyon so empty. The train is less than half full. The scare has stopped one of our clients who was scheduled to come soon to look at properties to purchase in Nice, so we are already seeing the effects. The New York Times is saying that the virus "Could Be the End for Europe’s Borderless Dream," closing down what has been open internal borders, until now.
The global economic impact is going to affect us all, so we better brace for the impact, regardless of how our leaders want to quell our fears to reduce the panic or for their own political gains. I'm just hoping that France will keep it contained. One man, who had not traveled to any outbreak spot, died in Paris from the virus. "Apart from the teacher, France has reported five other new cases of COVID-19 in the past 24 hours [as reported yesterday] – including two people returning from the Lombardy region of Italy, at the center of Europe's biggest outbreak of the disease."
Until we know more, my guess is that many people will refrain from traveling or making major decisions, such as purchasing a property, or moving to France and renting. The question is, how long will it take before we have control of what already seems like a pandemic, even though many authorities are loathe to admit that just yet.
Paris has a new record for sales volume this year and price changes of around 5 percent. Activity was still very good in the 4th quarter and 2019 ended with a new historic sales record, with almost 176,600 homes sold.
In the 4th quarter, prices increased by 4.7 percent in one year, mainly for apartments in the heart of the city. However, and according to the preliminary contracts of the Notaries of Greater Paris, the price increases could now spread to the Grande Couronne. This naturally constitutes a factor which weakens demand, however, many factors are still on the right track and point to a sustained number of sales in the coming months, despite the increasingly significant effort it takes to become a property owner in Ile-de-France.
The 4th quarter is a continuation of the previous quarters, with strong demand and buyers who take advantage of ever lower interest rates. Sales increased by two percent compared to the 4th quarter of 2018, with comparable increases for apartments and houses.
For three years, activity has been maintained at an exceptional level. Over the whole of 2019, the number of sales of resale homes approached 176,600 units, still slightly above the volumes of 2017 (175,400 units) and 2018 (170,000). Compared to the last 10 years (where 147,000 old homes were sold on average), activity increased by 29,500 sales and by 20 percent in 2019.
Paris remains a constrained market where the lack of supply and the level of prices do not allow to the fluidity of other markets in France. Approximately 35,200 resale apartments were sold in 2019 in the Capital, three percent less than in 2018 and nine percent less than in 2017. Compared to the annual average for the past 10 years, the number of sales increased by nine percent, but this rate is much slower than for all apartments in Ile-de-France (+19 percent).
In the Petite Couronne, sales volumes of apartments and houses did not change much last year compared to 2018. On the other hand, and at the same time, sales growth increased in the Grande Couronne for houses (+6 percent) and even more for apartments (+13 percent in one year).
All departments of the Grande Couronne record historical activity records for the sale of apartments and houses. In 2019, sales in the Grande Couronne increased by 34 percent for apartments and 22 percent for houses, compared to the annual average for the last 10 years. The development of the housing supply in this sector is driving this dynamic.
All housing combined, and according to the Notaries-INSEE indexes, the annual price increase was 3.9 percent in Ile-de-France in the 4th quarter of 2019. It was much stronger for apartments (+5,6 percent in one year) than for houses with stable prices (+0.4 percent).
The price trends for apartments remain driven by the Capital (+6.6 percent) and the Petite Couronne (+5.3 percent). However, an upward movement is starting in the Grande Couronne for apartments (+3.2 percent in one year in the 4th quarter of 2019).
According to our advanced indicators on pre-sale contracts, the price increase could become stronger in Ile-de-France by April 2020. It would no longer spare the Grande Couronne, whose price developments had remained much more contained until now.
In Paris, the price per square meter could increase from €10,210 per square meter at the end of the 4th quarter to more than €10,500 per square meter in April 2020, an annual increase of 8.2 percent.
In the Petite Couronne, annual price increases of 6 percent in Hauts-de-Seine, 7 percent in Seine-Saint-Denis and 5.6 percent in Val-de-Marne for apartments are expected in April 2020. Homes could see their prices increase by 4 percent in the Petite Couronne in one year.
The annual increase in prices per square meter of apartments in the Grande Couronne would reach 5 percent in April 2020, still according to our advanced indicators on pre-sale contracts. However, this increase must be put into perspective by recalling that the high point reached in terms of price per square meter in the third quarter of 2011 has not yet been found across the Grande Couronne.
Finally, the acceleration of the price increase could also spread to houses in the Grande Couronne. The fall in house prices, usually observed at the end of the year, did not occur, giving way to an annual price increase of 4.5 percent in April 2019. As for apartments, the price level reached by houses in the Grande Couronne in April 2020 could remain below the peak of third quarter 2011.
The market and households remain very dependent on the financial conditions of acquisition (level of rates, duration of debt and access to credit). The financial context remains generally favorable and the outlook is good, despite some recent alerts. However, and given the expected rise in prices in the coming months and the very high price level in certain sectors, households could see their solvency erode, particularly in Paris.
However, households remain eager to access property, particularly in Ile-de-France where the homeowner rate remains almost 10 points lower than the national average. The safe-haven effects (building up wealth, preparing for retirement, etc.), the lack of rental housing, socio-demographic trends and the risks relating to alternative investments are still encouraging households to buy. Confidence, improvements in the job market and better-oriented incomes can also support demand and secure buyers.
The Notaries of Greater Paris also describe a user market, without speculation. We can therefore predict that activity will remain buoyant in the coming months, in line with what is already observed. However, increasing and improving the housing stock, particularly within the various sectors of the Region and at the time of the realization of Grand Paris projects, must remain a priority, given the difficulties encountered by households in finding accommodation and the need for the Region to maintain or even increase its attractiveness.
P.S. Join us for a House Hunters Watch Party in Nice!
Not long ago, an episode of ours aired that was taped in Nice: "Picky Hunting in Nice" with "contributors" Sarah Starbuck and Jack Newcastle. "New York newlyweds follow their dream of living abroad by moving to Nice, France. He's passionate about having a dedicated office where he can teach linguistics, while she's hoping for peace, quiet and a stove for cooking."
Join us for a drink and a screening of this House Hunters International Episode!
After the showing of the episode, stay for the show — John Garland Jones will be singing in the front room of Le Truc directly after the screening...
TOMORROW,Friday, February 28th, 7 p.m. At Le Truc - 78 Rue de France (in the back room), Nice
WORK AND LIVE IN FRANCE
Is it on your list of New Year resolutions?
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