A drop in Paris real estate prices in Q1 2015
The real estate market in the greater Paris Île-de-France area saw prices fall a slight 0.4% during the first quarter of 2015 versus the previous quarter, according to the official quarterly figures published by INSEE/Notaires de France on May 28, 2015. The average price over the past 12 months has gone down by 2.1%.
For sales of real estate in Paris exclusively, the drop is slightly higher, with average prices down by 0.7% during the first quarter of 2015 compared with the fourth quarter of 2014. The average price over the past 12 months has gone down by 2.9%.
On a national scale, results show a slightly different landscape. For the first time in months, the average price of resale homes (excluding new builds) has stabilized, and even showed a slight increase of 0.6%. This could be an indication that the real estate market is picking up. Figures published by INSEE/Notaires de France are based on formal real estate closings, meaning that there is a two- to three-month delay from the time when the sales price was agreed and the offer was first signed. It awaits to be seen how the trends continue.
Borrowing rates have reached historical low levels. The average fixed 20-year mortgage is currently 2.3%, according to the loan comparison site Empruntis.
Prices were declining through 2014 as the scales were tipped in favor of buyers. With more properties on the market than buyers, sellers had to adjust their price expectations accordingly. The recent national figures signal that the economy may be stabilizing and that buyers may be coming back to the market.
An additional bonus for overseas buyers
The climate is particularly favorable for dollar and sterling buyers because of the weak euro. As an example, a buyer of a €300,000 apartment in Paris in 2008 would have paid US$465,000. At today’s rate the same apartment would cost US$327,000. That’s a whopping 40% differential, and investors are taking notice. As reported by Notaries de Paris Île-de-France, foreign buyers represented 9.2% of transaction in the first three months of 2015, compared to 8.2% for the same period in 2014.
Image ©Hans via Pixabay