Property Prices and Sales Volumes Down…But For How Long?

As predicted, prices are trending down in the Ile-de-France and sales volumes, too, but more for houses than for apartments.
Between December 2011 and February 2012, 41,300 homes were sold, an increase of 6% compared to the same period one year ago. The increase is solely due to the sharp rise in the number of sales recorded in January of this year (87% in relation to January 2011), affected by the reforms of the capital gains tax laws, which created an unusual number of sales for the month of January 2012 — you may recall that the new law doubled the number of years of ownership before tax was reduced to zero, effective February 1, 2012. For this reason, many owners chose to sell their properties before the law went into effect.
However, for the month of February 2012, the number of sales was down by 14% compared to the report in February 2011. The downward trend in prices is continuing, too. Prices of existing homes in Ile-de-France were down 0.4% between November 2011 and February 2012. The largest decrease was observed in Paris (-0.9% in 3 months).
From November 2011 to February 2012, the selling price of resale apartments per square meter has fallen slightly (-0.3%) in Ile-de-France (5530 euros/m2). It was stable in the inner suburbs (-0.1% to euros/m2 4430) and has nevertheless increased in outer suburbs (1.0% in 3160 euros/m2) with variations ranging from 0.7% in the Yvelines at 1.4% in Seine-et-Marne.

Paris is down slightly. The price per square meter in the capital now stands at 8,300€ (compared to 8,380€ in November 2011). According to the indications, the selling price is predicted to decrease to 8100€ at end June 2012.
Home prices are down more significantly than for apartments with a price of 309,600€ in February in the Ile-de-France, down by -0.6% compared to November 2011. All data indicates that the decline in home prices will continue.

The affect of the recent presidential election may skew the trends, just as the change in the capital gains tax laws made a significant difference for a short period of time. But reports are already out that currency rate changes may have more of an impact on the market than the change in presidency. With the concerns about Greece withdrawing from the euro, the euro is already trending down giving strength to other currencies. And French mortgages are the cheapest in Europe, so the indicators are that there will be plenty of new buyers.
And experts continue to say, “Whatever happens, though, you can be sure of one thing. France will continue to be one of the most visited countries on the planet and will, once again, head up just about every quality of life survey that the glossy magazines are so fond of publishing,” said Trevor Leggett, managing director of French estate agency Leggett Immobilier to PropertyWire.com.
Read the Chambre de Notaires’ report in its entirety (in French).
A bientôt,
Adrian Leeds
Editor, French Property Insider
Email: [email protected]

 
 
P.S. “Starting Over in Paris” — House Hunters International Episode HHINT-2807H airs today!: May 10, 2012 at 11:30 p.m. ET/PT, May 10, 2012 at 2:30 a.m. ET/PT and again on June 21, 2012 at 12:30 p.m. ET/PT.