Gridlock on the Streets, Property Prices Still on the Rise

The country wide strikes in France are taking their toll touching everyone, not just the government or the strikers, but just about every person in France and every industry. People can’t get to work, or simply go about their business, without bearing the extra effort and time of getting to where they need to go. This is causing delays and keeping people from their tasks, meaning they aren’t patronizing businesses either at a normal pace…and that’s costing everyone a lot of money.

There was a record more than 600 kilometer traffic jam on the 12th consecutive day of transportation strikes. Can you imagine? Only two Métro lines have been running — the automated lines #1 and #14 — otherwise, the Métro entrance gates are shut down and no one is going anywhere. Monday, when I trekked across town to the Notaire’s office for the signing of an Acte de Vente, I left an hour earlier than normal to be there on time and felt like a squished sardine among other commuters on Line 1 trying to do the same. Fortunately, Line 1 is the spine of the city and is at least some help. Some of the buses are running, so getting to Line 1 was at least possible, or on foot since I live so central. Yes, living central makes it all a lot easier. Those living in the suburbs have been hit worst. Trust me; this adds even more value to centrally located property.

I’ve never seen so many bikers and scooters on the streets. Usage is at an all time high. Thanks to the new lanes, they are whizzing along, but watch out pedestrians! These new travelers are dangerous because they don’t respect the rules of the road at all. They just see themselves as pedestrians on wheels and don’t stop for traffic lights or travel in the correct direction. The new lanes for these two-wheelers (and unicycles) add another dimension of caution for pedestrians trying to cross the streets because you have to look both ways, even when the direction of the traffic is “sense unique” (one-way). And no, since they don’t stop at the lights like the cars and motorcycles do, you’re taking your life into your own hands the minute you step out your door. It’s no joke. Accidents are up 40 percent since the strikes began according to the city’s “pompiers” (firemen), who are usually the first on the scene. (Here’s an interesting article in The Local) 

It wasn’t bad enough that the trains and buses shut down, but the truck drivers are staging their own protest creating blockages across the country. That means goods aren’t getting from point A to point B, either. And then a real blow to the Macron government came when High Commissioner Jean-Paul Delevoye resigned, the man behind the pension reforms who was in charge of the talks with the labor unions. That hasn’t convinced Macron to back down, however. He’s sticking with his goals to raise the age of retirement with full pension from 62 to 64 and doing away with some special privileges for particular workers.

Macron’s administration is trying to get the unions to take a break for Christmas so that families can be together over the holidays. That sounds like a reasonable plan and perhaps a chance for everyone to cool down. I’ve heard opinions from both sides of the coin. Perhaps if I was an employed French worker, I might feel like they do, but as a entrepreneur in business for myself, it’s tough to be empathetic to the cause.

The question for us is not just how it affects our daily lives, but how it will affect business and property prices. Delays to close property sales are already happening as a result and that costs everyone involved time and money. Just the “image” of France as a “strike-happy” country doesn’t instill a lot of confidence in investors…in property or in businesses. Ultimately, however, if Macron gets his wishes, or at least some of them, then the reforms should help stir business in France in general. That will be good for everyone, too. Stay tuned for more. The government plans to formally present the pension bill next month. It will then be debated in parliament, where Macron’s En Marche party has the majority. Let’s keep our fingers crossed that we can end the insanity!

Meanwhile the city is working to improve public transport! In an initial analysis, a circle of an 800 meter radius was built around the 69 new stations in greater Paris to identify the areas less than a 10-minute walk from the stations. A second circle was then built on a perimeter ranging from 800 meters to 1.5 kilometers. The median prices have been calculated in these different sectors over 10 years, since the time of the first announcements of the project. Overall, there has been no widespread impact in direct connection with the transport project on housing prices since 2008. Visually (see the chart), the curves representing the two geographical perimeters are changing at the same time.

Admittedly, since 2008, sometimes sharp price increases (up to 36 percent) were observed for property within 800 meters from the 69 stations. But they are not significantly different from what observed over a wider area (up 37 percent between 800 meters and 1500 meters around stations). Moreover, price changes in these perimeters are close to the variations observed for the Petite Couronne (up 30 percent) where most of the new transport system is located. Nor is there a measurable recent overvaluation (in the last two years, for example) of housing sold near the stations, pointing out that the maturation of the project and the first achievements begin to print a brand on the market.

Meanwhile, property prices on the Ile-de-France are still rising, although we haven’t yet seen the potential effects of the strikes. According to the Chambre de Notaire’s most recent report, issued today, the volume of sales is down slightly for the past three months (- 3 percent) compared to those observed a year ago. But, they are still very high. This downturn does not prevent the continuence of a high level of activity and it comes after the historic record of the third quarter of 2019. Sales from August to October 2019 also remain 15 percent higher than the sales observed on average during the period over the past 10 years.

Both homes and apartments are doing equally as well as previously and the results for the various geographic areas are not changing. The suburbs remained the most dynamic, but will that be the same after the strikes? It still posted a growth of activity of 9 percent when comparing the period from August to October 2019 to that of August to October 2018. During this period, the volumes of sales of houses lost 4 percent in the Ile-de France (-6 percent in the Petite Couronne and -3 percent in the Grande Couronne). Prices are predicted to show even faster increases in the coming year. In the Ile-de-France, from October 2018 to October 2019, the price of resale housing increased by 3.8 percent. The price increase are lower for houses (0.9 percent in one year) than for apartments (5.2 percent). Once again, the increases are more moderate in the Grande Couronne, despite the dynamism of activity. This means the suburbs aren’t appreciating as rapidly as is the Capital. Again, it’s an indication that buying central has its advantages.

In Paris, the price per square meter of resale apartments reached €10,170 in October 2019, with an increase of 2.4 percent in 3 months and 6.6 percent in one year. According to prices from pre-sale contracts, the price per square meter should reach €10,380 in February 2020 in Paris, with a very slight acceleration in the annual price increase (7.3 percent). According to the leading indicators of the Chambre de Notaires de Paris, we expect an increase of 5.5 percent in February 2020 in the Petite Couronne and 3.4 percent in the Grande Couronne. For homes, prices are expected increase by about 2 percent from February 2019 to February 2020.

Note: the statistics are calculated on sales observed over 3 months (August corresponds to the period from June to August).

Download the press release dated December 19, 2019. 

I’m writing you from Los Angeles where I am seeing a number of a number of consultation clients — people who have the yearning to move to France. I look forward to speaking with them and by next Thursday, I should have much to report from the City of Angels for the last issue of French Property Insider for 2019.

A bientôt and Happy Holidays!,

Adrian Leeds
Adrian Leeds Group

(in Los Angeles)

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