Rue St.-Honoré, Paris 1st
A MIXED BAG: RECENT PRICE TRENDS IN THE PARIS MARKET
Notwithstanding the international sub-prime crisis, diminished consumer buying power, tighter credit and a weak dollar that discourages American buyers, the French notaires association reports that the Paris real estate market remained buoyant in 2007.
Statistics just in from the notaires show that:
- Prices up. Despite recent speculation that Paris prices for 2007 were going to fall or remain flat for the first time in a decade, final yearly figures show that average prices per m2 actually augmented in all 20 arrondissements.
- Transactions down. On the other hand, the number of actual transactions has declined in the first two months of 2008, suggesting a market slowdown and a possible leveling off of prices this year.
- Per m2 costs up. Continuing a decade-long trend, Paris prices increased by 10.5% in 2007 (up from 9.7% in 2006) to an average of 6,360 € per m2 citywide. Only in the 8th and 10th arrondissements did the annual per m2 increase fail to reach 10%.
- Hot arrondissements. The Paris average was again boosted by traditionally high prices in the 6th (up 14.6%), 7th and 4th arrondissements, in that order. Average prices increased to 9,790 €/m2 in the 6th, to 9,260 € in the 7th and 9,040 € in the 4th.
- Lower increases in north Paris. The Paris average was pulled down by increases of less than 6% in the less sought-after 19th and 20th arrondissements, where per m2 averages came in at 5,050 € and 5,340 €/ m2, respectively.
- Biggest spike. Prices in the 1st arrondissement (Place Vendôme, Louvre, Châtalet) spiked the most, showing a 16.1% increase over 2006 to an average of 8,200 €/m2.
- Bargains. As of spring 2008 the best bargains are probably to be found in the 10th and 11th arrondissements, which continue to be sought out by bargain hunters looking for authentic Parisian neighborhoods with character and lively commercial activity. The average 2007 per m2 price was 5,560 € in the 10th, and 5,970 in the 11th.
- Other tidbits:
- Between 1996 and 2006 prices of Paris real estate increased by 100%.
- The fact that prices of apartments more than five years old diminished in July, August and September 2007 led some analysts to predict prices would decrease that year. That prediction evaporated as prices resumed their rise in the last four months of 2007.
- French real estate experts expect the market to soften somewhat in 2008. They advise owners to put their properties on the market as soon as possible before prices begin to fall, and counsel buyers to take advantage of sharper prices decreases in less sought-after arrondissements.
- An observation from Just France Sales: Regardless of where they are situated, high-quality properties (tastefully renovated apartments, or those that need renovation but have classic features) sell quickly, despite their higher per m2 cost, while average properties draw little attention from most buyers.
16th-century Watermill, Near Fontainebleau (Paris environs)
REPORT FROM THE PROVINCES: 2008 OFFERS A NARROW WINDOW OF OPPORTUNITY FOR BUYERS
Contrary to the persistently upward trend in Paris, in the countryside prices are leveling off, according to a report from FNAIM, the national realtors' association. Meanwhile realtors are seeing fewer sales transactions. These trends presage a bear market for sellers, and a rare opportunity for buyers who strike deals before prices rise again, a development some realtors expect to take place in late 2008 or early 2009.
Price trend nationwide. The year 2007 saw an overall rise in prices nationwide of 3.8% over 2006, as opposed to a 7.6% rise in 2006 relative to the previous year.
As this 3.8% figure was pulled up by still-buoyant prices in Paris, the Côte d'Azur and other select markets, it signals a significant turndown for most parts of France. By contrast, real estate prices nationwide rose 140% in the period from 1996 to 2007, according to FNAIM.
Sharper pencils. Part of the slowdown is attributable to tightened credit and higher interest rates for mortgage applicants. One result is that buyers increasingly are asking sellers to sharpen their pencils, and negotiations are becoming more protracted.
According to FNAIM, the overall situation resembles the French real estate market between 1995 and 1999, when prices nationwide rose an average of 3% annually. One prominent real estate analyst is even more pessimistic about 2008, predicting that nationwide real estate prices will rise no more than 2%.
As with Paris, the same rule seems to be holding true in the provinces: top-drawer properties in excellent condition with abundant amenities tend to sell best, while average properties - and there's a flood of them on the market - remain on the shelf.
Particular regions. Not all is grim news in the provinces. Nice saw a price elevation of almost 5% in 2007, which in Antibes the figure reached 14%.
>Provence. JFS' associates in Provence tell us the market is anemic relative to past years, but that superior properties in the premier regions - the Luberon and Alpilles, for example - continue to sell without difficulty. As you may have heard, actor Brad Pitt is the one of the newest arrivals in Provence, having recently purchased a 19th-century farmhouse near Eygalières for an estimated € 14,000,000.
Dordogne. Our associate in the Dordogne there reports that sales have been sluggish for the last two years. On the other hand, he predicts an increase in activity this year, as evidenced by a significant uptick in the number of mortgage applications in his sector.
We also invite you to read previously written trend reports and related articles:
Click here for 2006-2007 Paris price charts per arrondissement.
Click here for Previous Just France Sales reports on 2006-2007 market trends
Click here for previous articles on foreign investment in French real estate
Click here for Just France Sales' tips to buyers
Click here for tips on how to send mortgages and other payments to France
Contact us for information on currency brokers and lending banks that specialize in foreign investment.
