Paris Apartment Market Sees Sharp Price Increase

Apartment prices in Paris are rising at a fast pace, indicating a strong shift in demand from the countryside to the city. Despite low mortgage rates, strong price …

Apartment prices in Paris are rising at a fast pace, indicating a strong shift in demand from the countryside to the city. Despite low mortgage rates, strong price increases are expected to end as the French government implements cost cutting measures. See the following article from Global Property Guide for more on this.

While property prices for the rest of France were generally stable, apartment prices in Paris and its vicinity continue to surge in Q3 2010. The average price of apartments in Paris was €6,381 per sq. m, up by 9.7% y-o-y according to the National Association of Real Estate Agents (FNAIM).

Official government data show strong price increases in Q2 2010 in Paris and its vicinities. The average price of existing apartments rose to €6,680 per sq. m., up by 10.2% y-o-y according to Notaires – INSEE (National Institute for Statistic and Economic Studies). Moving outward from Paris, the average price in the Petite Couronne (Little Ring) was €3,860 per sq. m., up by 7% compared to Q2 2009. In the Grande Couronne (Large Ring), the average price was €2,900 per sq. m., an increase of 6.2% within the same period.

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For the Paris region (formally, Ile-de-France), composed mainly of Paris metropolitan area, the average price rose 7.87% y-o-y to €4,700 in Q2 2010. The sharp increases in Paris house prices while prices in the rest of the country indicate the strong shift in housing demand from the countryside to the capital. This is attributed to the increasing uncertainty regarding France’s economy.

The average price of residential real estate in France was €2,426 per sq. m. in Q3 2010. It was up by a mere 0.6% y-o-y and 1.1% q-o-q, according to FNAIM. Apartment prices rose by a mere 0.2% y-o-y and 2.5% q-o-q to reach €2,956 per sq. m. On the other hand, the average price of detached houses rose 1.1% y-o-y but fell 0.3% q-o-q to €2,050 per sq. m., over the same period.

Aside from the urban migration, low mortgage rates gave further push to property prices in Paris. The strong price increases, however, are not expected to continue as France implements cost cutting measures. The effects of the debilitating strikes in response to pension reform and other belt-tightening measures are also expected to impact negatively on property prices.

Economic activity in France grinded to a halt in October due to rolling strikes and nationwide demonstrations. Workers and students were protesting against the plan to increase the retirement age from 60 to 62 and the age for full pension from 65 to 67. The proposal is just waiting to be signed by President Nicholas Sarkozy after passing both houses of congress.

This article has been republished from Global Property Guide. You can also view this article at
Global Property Guide, an international real estate analysis site.

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