Short supply helped Paris real estate hit new highs, with the potential of a double-digit price gain for 2010. However, the rate of increase ahead of wages could be problematic. For the time being, low interest rates contribute to a buoyant buying mood that is extending throughout France, reversing the downward trend of the past two years. See the following article from Property Wire for more on this.
Property prices in Paris have reached their highest ever level with an increase of 7.8% over the past 12 months, according to the latest figures from notaires who conduct real estate sales. The average cost of a 50 square meter apartment, excluding new builds, in the French capital city is now around €334,000, according to the figures from the Notary’s Association of Paris.
The previous record, €6,620 per square meter was set in the last quarter of 2008. In its report the association says prices are rising because of a shortage of properties for sale.
Christian Lefebre, president of the Association, said prices should continue to rise through to the end of the year as demand continues to outstrip supply, and could reach 10% for the whole of 2010.
Prices vary throughout the capital but 13 out of 20 arrondissements have seen values increase. The sixth district is currently the most expensive arrondissement with apartments costing a record €9,900 per square meter on average, closely followed by the seventh at €9,730 per square meter and the fourth at €9,560 per square meter.
The most expensive place to live is St Germain des Pres where apartments are selling for €12,400 per square meter. The second district has seen the highest increase with prices up 19.3% in a year. At the other end of the scale, the nineteenth district has the cheapest properties, costing on average €267,000 for 50 square meters. But this district is attracting the attention of investors as it is so affordable.
The price increases in Paris are reflected across France where economic confidence is back after the global economic downturn. According to Insee, the National Statistics Institute, the cost of apartments across France has risen overall by 6% and house prices are up 5.8% this year so far. This compares to price falls of 7.l1% in 2009.
But Lefebre warns that the buoyant property market is still at risk. Interest rates on property loans, which are at an historic low, are bound to rise in the medium term, which will reduce what buyers can pay, he explained.
‘I don’t think we are looking at the same situation we had at the end of the 1980s when there were plenty of properties for sale. This is the housing market catching up after a drop in prices in 2008 and 2009,’ he added.
He hints at slight concern about such high prices. ‘To live in Paris is becoming a luxury. Apartments are sought after like gold dust. In the last 15 years prices have increased two and a half times and salaries by 1.6 times. Continuing like this is not welcome,’ said Lefebre.
But Paris is likely to remain popular with investors who want to rent out their properties. According to holidaylettings.co.uk the French capital is the most popular location for rentals in France.
The most sought after apartment is a one bedroom residence.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.