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Sales and Prices Down…But Not for Long!

Volume XXI, Issue 6

A view of Paris apartment buildings

According to the Chambre de Notaires de Paris, real estate sales volumes and prices at the end of November 2022 continued to decline, but without further deterioration.

As in previous months, difficulties in accessing credit and rate hikes have dampened demand, against a backdrop of economic and geopolitical uncertainty. Sales volumes of resale homes recorded from September to November 2022 (44,320 units) were 8% lower than those recorded during the same period a year ago. This represents approximately 4,000 fewer transactions in the Ile-de-France region.

However, it should be noted that despite this decline, activity is still at historically high levels: 8% above the September to October average of the past 10 years (41,000 sales).

The different geographic sectors and market segments are experiencing different trends that continue from one month to the next. The decline in activity is limited to 5% for apartments when comparing September to October 2022 with the same period in 2021. Paris continues to stand alone, posting a further increase in sales (+5%), no doubt with a prolonged catch-up effect. The decline in apartment sales is limited to 7% in the Petite Couronne but reaches 12% in the Grande Couronne. The single-family home sector, which had experienced an exceptional level of activity in 2021, will see its sales fall by 16% if we compare September-October 2022 with the same period in 2021. The downturn is occurring at almost the same rate in the inner and outer suburbs. The first results for December are in line with this trend, with no further deterioration in the downturn, which will make for a good year in 2022, despite a significant deceleration in the last few months.

Price trends continue to moderate. In Ile-de-France, from November 2021 to November 2022, housing prices rose by 1.7%. They were up by 2.7% a year ago. Values remained stable in November for apartments in Ile-de-France (+0.2% from November 2021 to November 2022) and are still up fairly steadily for houses (+4.3%).

In recent months, trends have been very slightly downward, in line with seasonality (fewer people buy in the fall and early winter) but also undoubtedly as a result of the easing of demand. Thus, from August to November 2022, apartment and house prices stabilized (-0.3% and +0.1% respectively in 3 months). According to our leading indicators on pre-contracts, this movement will continue during the first months of 2023.

In the Capital, the price of resale apartments was €10,590/m² in November 2022 (-0.8% in one year). The annual fall in prices would still be 0.8%, with prices falling to €10,440 per square meter in March 2023 in Paris.

In Ile-de-France for apartments, prices should change a little from March 2022 to March 2023 (-0.3% in the Petite Couronne and +0.8% in the Grande Couronne). For houses, the annual increase in house prices will be reduced to 2.1% in Ile-de-France, with a stagnation in the Petite Couronne (+0.3%) and an increase of 2.9% in the Grande Couronne.

The erosion of prices, which has existed for several years in Paris, now seems to be spreading to London. On the other hand, prices remain bullish and historically very high in New York. But for how long?

It is interesting to note that in England, the United States and France, as in many OECD countries, residential property prices have risen very rapidly in recent years. The same causes produced the same effects after the health crisis. The real estate markets were boosted by easy access to credit, low interest rates, and abundant savings, built up in the absence of being able to consume, and the massive development of teleworking.

The recent deterioration in the overall environment, heightened economic uncertainties (weakening growth with high inflation), tightening monetary policies, and high geopolitical tensions have begun to weigh on activity and sales in recent months, often, but not always, dampening price increases.

In the United States, price increases have been particularly rapid in recent years. From June 2020 to June 2022, prices for all homes combined increased by 39% in the United States and by 35% in New York (according to Case Shiller* ). During 2022, the production of homes and the supply of homes for sale remained very low and prices were therefore resilient, despite the decline in sales volumes throughout the year. An initial slowdown was nevertheless perceptible at the end of 2022 with the first decline in prices in both the United States (-2.7%) and New York (-1.5%) between June and September 2022.

New York

New York

In Paris, prices have eroded slightly over the past three years. Cumulatively, prices have fallen by 2.5% from the November 2020 high point to November 2022**. But the annual decline in prices has remained fairly constant (-1.7% from November 2020 to November 2021 and -0.8% from November 2021 to November 2022). At the same time, price increases for resale homes have been much faster in France as a whole (+9.6% from third quarter 2020 to third quarter 2022).

In England, the introduction of property tax exemptions on purchases from July 2020 to September 2021, designed to facilitate home ownership, have also increased demand and pushed prices upwards (+16% from second quarter 2020 to second quarter 2021 in England, +8% in London according to the Office for National Statistics***). Then the trend turned downward, no doubt also in line with the economic situation. In London, as in Paris, price increases have been more moderate in recent years (-1% in London from second quarter 2021 to second quarter 2022, the latest known figure, but -10% in England over the same period).



It is difficult to compare Paris with other major international cities due to its specific characteristics: a very limited surface area and particularly high population density (2.1 million inhabitants on 105 square kilometers, i.e. more than 20,000 inhabitants/square kilometers living in older and smaller housing). London, whose housing stock includes more houses and larger spaces, is four times more populated than Paris but 15 times larger (8.9 million inhabitants in 1,572 square kilometers). It is therefore four times less dense. New York has a population similar to London but in a smaller area (9 million inhabitants in 785 square kilometers) and therefore has an intermediate density. In spite of these differences, the comparison between the three cities is rich in information.

Today, the price of a home can be estimated at €593,000 in Paris compared to €600,000 in London and €740,000 in New York. But these prices, which are actually quite similar, cover different realities.

In the three metropolises, there is still a strong dispersion between the values of the different neighborhoods, including in Paris, despite a concentration on a much smaller area. It is also worth noting that these differences are increasing in the three cities.

In the French capital in 2022, the average price of a home in the Invalides neighborhood (7th) reached €2,700,000 compared to €340,000 in La Chapelle (18th), the most affordable of the 80 neighborhoods. This ratio of 1 to 8 is more moderate than in the other two metropolitan areas where it is 1 to 15, which is logical given their scale. A slightly larger scale (from 1 to 10) is found throughout the Ile-de-France region, since the average sale price of housing in some municipalities is close to €100,000, while it exceeds €1,000,000 in other municipalities in the region.

In London, €247,000 (median annual price at the end of June 2022) is needed to buy a home in Abbey, the least expensive of the 640 wards in the Barking and Dagenham district, while it costs almost €4,000,000, i.e., fifteen times more, in the very upscale Knightsbridge and Belgravia district of Westminster.

In New York City (typical monthly price at the end of November 2022) among the 202 neighborhoods of the city, the extremes range from €200,000 in Parkchester (in the Bronx) to €3,280,000 in Tribeca (near the One World Trade Center).

*Sources: For the United States, the long-term data are based on the results published by Case Shiller and the New York prices are published on the Zillow website.
** All data for the Ile-de-France region comes from the Notaires-Insee indices and the BIEN database.
***Data for London and England are from the Office For National Statistics (ONS).

To read the communique in its entirety (in French), download the PDF.

A bientôt,

Adrian Leeds
The Adrian Leeds Group®

P.S. Tuesday I participated in the 2023 US Expat Finance Conference by speaking for one hour on a Zoom webinar about “Buying Real Estate and Getting a Mortgage as a US Expat.” The webinar was recorded and as soon as we have a link to the recording, we’ll be sure to let you know!


Author Lindsey Tramuta at a Paris cafeP.P.S. Come and welcome Lindsey Tramuta to Après-Midi this Tuesday, February 14th! Lindsey Tramuta is a bilingual French-English culture and travel journalist, bestselling author, podcaster, and editorial consultant. Since 2012, her work has appeared in The New York Times Style Magazine, The New York Times, Condé Nast Traveler, Fortune Magazine, Afar Magazine, Travel & Leisure, Eater, and Vogue, among other international publications. Based in Paris for over 15 years, she is the author of the bestselling book The New Paris: The People, Places & Ideas Fueling a Movement and The New Parisienne: The Women & Ideas Shaping Paris. Learn more about Après-Midi. And be sure to read her latest missive: The New Paris Dispatch, Issues du moment, What’s going on in Paris and beyond? by clicking here.


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