Paris Property is Non-Stop Growth, But Is Airbnb Really to Blame?

Paris property is non-stop growth, with a growth in the volume of sales of 10 percent over the previous year. Prices are up again, to the tune of 4 percent annually, as reported at the end of this April. And according to the Notaries of Greater Paris, the first results for May 2019 saw no change in that pace.

Penalized by the lack of supply, Paris is slightly behind the other departments in the region, however, February to April 2019 sales were up 5 percent from the same period last year. The Grande Couronne (the outer suburbs) is experiencing the strongest growth (+15 percent for apartments and +12 percent for houses) with strong disparities by department. Finally, in the Petite Couronne (the inner suburbs), the number of sales of resale apartments increased by 11 percent and that of homes by 9 percent.

In Paris, the price per square meter of resale apartments reached €9,760 in April 2019, up 6.6 percent year-over-year. As announced, and based on pre-sale contract prices, the price per square meter should exceed the symbolic mark of €10,000 in August 2019, and the annual increase in prices could reach 7.1 percent.

Read the full report here. 

While prices are going up, up, up in the Capital, the city officials are pointing to the increase of short-term rentals as the culprit, but in my  opinion, that’s an easy scapegoat for their lack of insight and intelligent solutions to making the market more fluid, rather than more controlled.

According to a recent article on France 24, families are “fleeing” Paris. That’s a strong sensationalist phrase for what is happening worldwide as families seek larger abodes at lower costs outside of major city centers. Officials are quick to blame Airbnb, without really knowing what are the causes, because it’s easier to do that than actually assess the facts and try to understand them.

The shortage of housing combined with the rise of prices is not solely due to an increase in tourist accommodations. Supply and demand play a large factor — as Paris zoning laws don’t allow it to grow “up” nor “out,” making real estate in the capital city finite. One must also consider the loss of population in Paris, as well as in other major cities. Fact is, Paris population has been declining since the 1950s, long before Airbnb came along. Falling birth rates are a big reason the schools are seeing lower enrollments, too. And when you analyze the current rental laws here in Paris, that overprotect the tenants, they have discouraged landlords from offering long-term housing for fear of non-payment of rent and inability to evict deadbeat tenants. Shorter-term housing not only protects them from this risk, but increases their profits, badly needed when unemployment rates are so high. Rising prices and now the new rent control laws further discourage property investment and investment in property improvements. All this leads to a very tight market — a shortage of available properties and an exclusive situation increasing prices.

With short-term rentals now illegal for secondary properties, more properties are being left vacant. How do the authorities see that as an answer, when the regulations make rental of primary residences legal, but not secondary homes? Shouldn’t it be exactly the opposite to encourage use of the properties? There are other ways of encouraging long-term use to fill these vacancies.

The authorities need to free up the market to make it is more fluid, not institute even more controls. Did they not study economics 101? Or human behavior? I fear not! And I suppose they didn’t bother to read “How Damaging Were French Rent Controls Between 1914 and 1948?”

For a bit of insight, read it here.

A bientôt,

Adrian Leeds
Adrian Leeds Group

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