Sales are Up, Prices are Stable…a Perfect Time to Buy in Paris!

Fourth quarter 2015 in Paris and the Ile-de-France reported higher sales and lower prices. Here’s the fourth quarter report from the Chambre de Notaires (roughly translated). You may download the full pdf report for Paris and the Ile-de-France (in French). 

SALES VOLUMES ARE UP AND PRICES ARE STABLE

Since the spring of 2015, the Ile-de-France real estate activity has recovered and the year ended with an active 4th quarter. In total, more than 176,000 homes have been sold in the Ile-de-France, nearly 26,000 units and 17% more than in 2014. Over the whole of the year, the activity is even higher by 4% than the average of the past 10 years and barely 5% lower than the historically high from the 1999-2007 period. The first 2016 results are encouraging and the activity remains dynamic, but in the absence of a significant improvement of the situation of households, the weaknesses of the market persists. Interest rates must remain low, along with favorable regulation and reasonable prices so that demand continues to spark.

Buyers have turned more readily to 3-room apartments and the large houses whose sales are progressing more quickly than other types of housing. In Paris, the price per m² varies in the last year in small proportions hovering around the bar of the 8,000€ (+ 0.4% in one year). It should still hover around this value in the coming months, after the leading indicators on the preliminary contracts that continue to show a slight annual increase.

It is now four years that prices are stagnating or are slightly oriented downward. The total decline varies between -4% and -13% according to the departments and the size of the property, from their last peak in early 2012. Throughout the Region, the decline was less pronounced for small apartments: -5.3% for the studios, -4.8% for the two-room apartments, -6.1% for three-room apartments and -7.0% for the larger apartments of four rooms, -8.3% for five rooms and more.

After a period of apathy, the market is clearly reactivated in mid-2015. Improved solvency of households, thanks to the particularly attractive level of interest rates, prompted buyers to focus again on the market. Sales volumes recovered and prices remained stable. On the other hand, the increased activity has benefited almost all of the markets. But is this movement sustainable or is it partly a cyclical effect and therefore likely to fade, or even be interrupted?

On one hand, the low rate of owners of 49% in Ile-de-France (compared to 58% in the entire country) especially among the younger generation (while the level of renting remains high) are looking for security to prepare for their retirement or inheritance. The tax ‘Patel’ device, the zero rate loan (PTZ) in its new version, and the still very attractive interest rates in 2016 would also motivate clients and support the number of sales.

On the other hand, the weakness of the market remains present. The economic and social situation remains uncertain without a real recovery and an improvement in the economic situation of households, is untrustworthy.

Prospects are therefore favorable, but fragile, even if it is random to say that the current trend is sustainable. Finally, and above all, prices must not increase to keep the market moving in its newfound fluidity.

By 2015, the number of resale apartments sold in Paris increased by 20% over 2014. This large number of transactions succeeded several years of low activity. However, the volume of sales by 2015 remained below the average for the period 1999-2007 (-11%).

Prices in Paris remain around the €8,000/m² in Paris. The price of the apartments is expected to remain stable with a price of €7,890/m² in December 2015. According to indicators from the preliminary contracts, this trend could extend early 2016. The price of the apartments for will settle at €8,060/m² in April 2016 — a slight annual increase.

Across the capital, prices in the most expensive and the least expensive neighborhoods have remained rather stable in 2015. The strong evolution observed in the district of the Champs-Elysées is explained by the type of properties sold. It is noted that in the 4th quarter 2015 there is a gap of around €8,300 between the Champs Elysées, the most expensive district of the capital and Pont de Flandre.

Six districts were more than €10,000/m² compared to four a year ago, with only one over €11,000/m². The 1st and the 8th are the two districts to have reached this level. In one year the prices of resale apartments changed little in Paris (+ 0.4%). This stability in the capital was also observed in the majority of the districts where prices rose very little in 2015. Only the 1st, 2nd and 4th arrondissements recorded variations on the increase. It is recalled however that sales were traditionally quite few in these boroughs.

From the last peaks of 2011 or 2012, according to the types of property, Paris prices are declining very slight but fairly regularly, with a stabilisation in 2015. In Paris, the price per m² lost 480 euros per m² over summer 2012 and at the end of 2015, from €8,460 to €7,980 (-5.7%). In the end, and despite the decline in activity, the total decline in prices proved to be very limited and testifies to the strength of the Parisian market, no doubt linked to the lack of housing supply. Indeed, declining accumulated over several years does not cancel out the increase in 2011 alone. It’s a little less overall on studios and two-room apartments, with fewer buyers able to afford even small apartments. Over the same period, the price per m² of five-room apartments and larger declined by 8.6%, those of four rooms of 6.7% and the three rooms of 6%, while the studios declined by 4.2% and two rooms of 4%. At the end of 2015, all types of goods displayed again m² prices higher than those of early 2011.

Finally, in 2015, prices were broadly stable in Paris (+ 0.4%) with annual increases of 1.5% for five rooms and more, 1.1% for two rooms, 0.6% for studios and 0.3% for the three rooms and a decrease of 2.1% for four rooms.

In Paris, the city is mostly composed of small dwellings. Quite naturally, they therefore predominate sales. Typically, less than 20% of the properties sold are four room apartments and larger, compared to approximately 35% of two rooms, and 20-25% of studios and two rooms. In total, the number of three rooms sold in Paris increased 24% from 2014 to 2015.

The most expensive neighborhoods in Paris are the Champs-Elysées (8th), St.-Thomas-d’Aquin (7th), Les Invalides (7th), Notre-Dame (4th) and St.-Germain-des-Prés (6th). The least expensive neighborhoods in Paris are Pont de Flandre (19th), La Chapelle (18th), Amérique (19th), La Villette (19th) and La Goutte d’Or (18th).

Note: with sales volumes up, the availability of property is decreasing. Based on the law of supply and demand, prices will naturally increase. This means it’s an excellent time to make an investment in Paris!

A bientôt,

  Adrian Leeds
  Editor, French Property Insider

  Email: [email protected]

 

 

    

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