In a recovering market, buyers buy bigger than before
Encouraged by a net increase in their purchasing power, buyers have returned to the real estate market. And now they can buy more square meters for their budget.
Historically low borrowing rates have contributed to renewed market activity for French real estate. Laurent Vimont, the CEO of real estate agency network Century 21, notes enthusiastically that “it is difficult to find downsides to the real estate market at present, and this has been the case for several months.”
The French property market confirmed its recovery in the first half of 2016, with the number of transactions increased by approximately 14.5% compared to the same period last year.
“Contrary to what we typically see in a period where sales volumes are rising sharply, prices are remaining stable,” says Vimont. Indeed, price growth has remained moderate in France, except for Paris. Vimont’s firm recorded a slight increase in property prices of 0.6% over a year in France.
Buoyed by extremely low interest rates, buyers are enjoying a real increase in purchasing power, and allowing them to go for larger properties than they might have a year ago. The average square meterage bought in France — apartments and houses — grew by 1.6m2 over a year, reaching 84.7m2 during the first half of 2016, according to figures by Century 21.
In Paris, the average property size purchased increased by 2.7m2 in a year, reaching 53m2 in the first half of the year. This is the highest average surface area the capital has ever known. Prices in the capital have grown too: while prices have remained relatively stable in most of France, they have grown by 2.5% in the last year, to reach an average of 8,300€/m2.
While first-time buyers are flocking to purchase property in both Paris and throughout France, investors have begun to spurn the capital in favor of elsewhere. While sales to investors grew by just 8.6% in Paris year on year, it increased by 17.8% in Île-de-France — and by 16.5% across the whole of France.
According to Vimont, this is due in large part to rent control laws instituted in August last year, which has pushed investors out of Paris and into its inner and outer suburbs. Still, he predicts a price increase of 1 to 2% for the whole of France for 2016 and an increase of 3 to 5% for Paris, where the market is “verging on overheating.”
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