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Confinement Sparked and Fueled the Paris Market

Confinement Sparked and Fueled the Paris Market
Paris During Confinement

For those of you who thought confinement would bring Paris prices down, think again. Sure, sales came to a halt, but prices continued to rise in Paris and the Ile-de-France.

Confinement Sparked and Fueled the Paris Market - French Property Insider | AdrianLeeds.com

According to the Notaries of Greater Paris, from February to April 2020, sales volumes were limited to 23,940 resale housing units in Ile-de-France and lost 41 percent compared to the same period in 2019. At the end of April, the impact of confinement on the quarter therefore increased since it affected half of the period studied (a month and a half, from March 17 to April 30). In April 2020 alone, sales of resale housing in Ile-de-France fell by 75 percent compared to April 2019.

Confinement Sparked and Fueled the Paris Market - French Property Insider | AdrianLeeds.com

Unsurprisingly, the blocking of activity affects the whole of Ile-de-France and the different types of real estate, without much differentiation. Sales of apartments fell by 40 percent in Ile-de-France and those of houses by 43 percent. Apartments in the Grande Couronne, the flagship market in recent months, also experienced a drop of 37 percent when comparing the months of February to April 2020 to those of February to April 2019. To provide the first trends for May and June 2020, when a notable recovery in sales begins, new activity indicators are presented below and in the “focus” report (in French).

FOCUS:

Paris during confinement | AdrianLeeds.com We have currently recovered 90% of the activity recorded on the eve of strict confinement. With the health crisis and confinement, the Ile-de-France real estate market came to an abrupt halt and sales collapsed. Since May 11, 2020, the gradual lifting of confinement has authorized movement and therefore visits to a radius of 100 kilometers as well as the moves, and streamlined the intervention of the various players. Even if all the brakes have not been lifted, real estate activity has restarted.
    
    But to what extent and with what perspectives?
    
    To be as close as possible to cyclical developments, and avoid delays related to processing to enrich and improve the data of the Notaries of Paris during confinement | AdrianLeeds.comGreater Paris, we carried out an analysis of the flows of daily sales of housing when they were deposited initially into the database. Not all of them are counted yet, especially the most recent ones, and flows are likely to improve further. It is therefore a new activity indicator, calculated over four rolling weeks that captures the variations while smoothing them out.
    
    We then compared different activity points of the year 2020, namely the date of pre-confinement (March 16), the date of total confinement (April 15), and the most recent post-confinement point available (June 8), between them, or relative to the same period in 2019.
    
    As we already indicated on May 28 at our last press conference, the beginning of 2020, before confinement, was already a little less dynamic than the activity observed in 2019. The social movements of the end of 2019, forcing visits and signing pre-sale contracts, had probably already limited sales in early 2020.
    
    As of April 15, 2020 during the confinement period, sales flows decreased by 81% compared to the pre-confinement period confinement (March 16), a five-fold split in the number of home sales. Since 11 May, the residential real estate market in Ile-de-France has been rising sharply, with the number of home sales rising to more than 90 percent of pre-confinement activity.
        
    But for how long?
    
    This rapid resumption of activity was expected because after the sudden halt, it was necessary to process the pending files and to transact the pre-sale contracts generated before confinement. At the moment, the level of activity at the beginning of 2020 has not yet recovered. It is true that the constraints on activity have still out-performed in May and remain partially so in June. It will be necessary to see whether this situation persists before the summer holidays.

Confinement Sparked and Fueled the Paris Market - French Property Insider | AdrianLeeds.comIn Ile-de-France in one year, from April 2019 to April 2020, and in the continuity of the previous trends, housing prices increased again by 6.8 percent for apartments and 4.4 percent for houses. In Paris, the price per square meter of resale apartments stood at €10,530 per square meter in April 2020, an annual increase of 7.8 percent. This extension of the upward trends should come as no surprise: the sale prices are the result of negotiations concluded at the end of 2019 or at the beginning of 2020, while the market remained very dynamic. But this upward movement does not seem to have stopped with the crisis.

According to the prices from the pre-sale contracts, the Chambre de Notaires expects in August 2020 a sale price of €10,750 per square meter in Paris, still up 7.7 percent annually. Although in sharp decline, the volumes of pre-sale contracts remained largely sufficient to allow good statistical representativeness of the market. This is also the case in the Hauts-de-Seine, where price increases could also be prolonged (+6.3 percent in one year), for apartments in the Petite Couronne (+6.2 percent) and for Ile-de-France as a whole (+6.7 percent).

However, it remains to be proven that the current situation will not have affected the conversion rate of the pre-sale contracts for final sale.

Download the pdf report here. For a dynamic version, click here (in French).

From personal experience, our North American clients are plentiful and purchasing property sight-unseen, trusting us to make good judgments for them, so as not to lose this golden opportunity before property just gets more expensive.

Are you willing to do the same?

À bientôt,

Adrian | AdrianLeeds.comAdrian Leeds
Adrian Leeds Group

Postmarked from Paris | AdrianLeeds.com

P.S. If you are considering transferring currency, do it with one of our recommended partners to save about two percent on the commissions and fees! See our currency page for more information.

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