Stable prices and sustained sales in Paris and the Ile de France region
The Paris and Île-de-France real estate market has become fluid once again, with sustained activity throughout the region and apartment and house prices remaining stable. However, it’s still too early to tell if the market has made a full recovery.
Early sales volumes reports for 2016 are encouraging, with 35,940 units sold between November 2015 and January 2016, up 29% from the same period a year before.
But that notable increase in the number of sales has had little impact on prices, which are experiencing prolonged stability. In late January 2016, prices varied only slightly, dropping by -0.4% as compared with a year before. Broken down, this was due to house prices increasing by 0.4% and apartment prices falling by 0.7%. The change in prices over 3 months was a drop of just over 1%.
Prices in Paris:
In the first quarter of 2016, the cost of a Parisian apartment averages out to 8,000 euros per square meter. As always, this city-wide figure hides the wide disparities between neighborhoods and apartment features and quality. In late 2015, the 1st, 4th, 5th, 6th, 7th and 8th arrondissements of Paris all saw average prices go over the 10,000€/m2 mark.
In the 6th arrondissement, the most expensive in the capital, the price average surpassed 11,000€/m2, reaching 11,320€/m2 at the end of 2015. Prices in the 1st and 4th increased the most during 2015, swelling by 7.1% and 5.4% respectively.
In March 2016, residential property prices in Paris increased by 0.2% citywide, with an increase of 0.9% since the start of the year. Similar trends are observed outside of Paris too, with prices in the inner suburbs increasing by 0.3% in March and 0.6% since January 1.
Prices in Île-de-France:
In late January, homes in Île-de-France cost an average of 5,240€/m2. In the inner suburbs, prices dropped by 1.8% over one year, with the average standing at 4,200€/m2. In the outer suburbs, an apartment costs 2,870 euros on average — 2.4% less than the same time last year.
Outside of Paris, the most expensive apartments are located in the Hauts-de-Seine department (5,120€/m2 on average); the cheapest in Seine-et-Marne and Essonne (at an average of 2,540€/m2 in each).
A fragile recovery:
Historically low interest rates have beckoned buyers back to keep the Paris market moving. However the market has yet to see a sufficient number of buyers to offset the relatively large housing stock. This means that less desirable or overpriced properties can still linger on the market with few if any offers. Even so, sales volumes are the highest they’ve been in 8 years.
It remains a good time to purchase Parisian property. Prices in the capital have fallen by 11% since 2011, and interest rates have more than halved – from 4.3% in July 2011 to 2.15% today. The low prices combined with low rates equates to a 35% gain in purchasing power for property buyers in just 5 years. For dollar-based international buyers, this is coupled with enormous gains in the exchange rate over the last 2 years, further boosting their options on the Paris market.
Prices are expected to remain stable through the spring, which is historically one of Paris real estate’s busiest times of the year. Apartments in the capital are expecting to rise only slightly, to 8,030€/m2 by late May. Longterm price stability seems likely, as does stable or potentially dropping interest rates, which are already at an an all-time low.
In the absence of significant improvements in employment rates or the economic situation of individual French households, the sense is that the market will continue at the pace it is now for some time to come.
- The real estate market in Île-de-France continues to regain momentum, with sales volumes increasing and prices remaining stable.
- Recovery is chiefly due to historically low interest rates, as economic conditions in France remain relatively unchanged.
- The market remains relatively fragile because of wider economic stagnancy.
- Demand from buyers remains lower than the volume of properties on the market, which means that prices have not been inflated and with many purchases there is room for negotiation.
- International, particularly dollar-based buyers, continue to enjoy strong purchasing power to scoop up properties in central Paris.
Photo credit: PublicDomainPictures / Jon Luty