For Immediate Sale:
51 m2 on rue Vieille du Temple (3rd) for 730,000€ (*See the P.S.)
Volume IX, Issue 22
June 2, 2011
Paris, France
FrenchPropertyInsider.com
Bonjour French Property Insider Subscriber,
The report is out. Paris property prices are up 20.8% this past year -- from first quarter 2010 through first quarter 2011. And that's an average! In one district, the 7th, prices have soared as high as 27...%. Crazy?! "Au contraire." It was to be expected. Interest rates remain low and available housing on the market struggles to increase, therefore demand is up and owners are reluctant to sell. So, it's not a surprise that sales actually diminished by 12% over the same period.
Much to the dismay of the politicians who are scrambling to find affordable housing for their constituents, the idea of holding on to property and renting it at a profit grows in popularity...by both the French and by foreigners who see an investment opportunity...just like us.
The average price per square meter in Paris is up to 7,780€, but certain central districts have risen over the 10,000€ per meter mark -- the 4th, 6th and 7th. Only the 19th district is still under the 6,000€ per square meter line. For the first time in four years, the 7th district (11,880€/m2) has surpassed the 6th (11,870€), followed by the 4th (11,080€). A fourth district passed the 10,000€/m2 bar -- the 1st with 10,030€/m2. In contrast, the least expensive district remains the 19th at 5,970€/m2, followed by the 20th (6,380€/m2) and the 18th (6,830€/m2).
This period has shown the strongest growth in the last 20 years measured at between 16.4% (2nd) and 27.3% (7th). Per square meter prices vary between 5,900€ in the Amérique quarter of the 19th and 12,710€/m2 in Les Invalides of the 7th.
There has been a lot of discussion about the French property market heading toward a "bubble" that could break at any moment...but there is enough evidence to show this isn't true. Prices trending upward has more to do with a lack of inventory and that doesn't appear to be solvable in the near future -- particularly in Paris where historic districts are protected and new builds are virtually impossible. Interest rates are creeping up, which will diminish demand, therefore prices may tend to level, but there is no sign of a burst of the so-called bubble!
How high can prices go? As long as investors have the funds, lenders are willing to lend and inventory remains low, there is no telling. What's of primary concern is how rental rates are not keeping up with cost and therefore return on investment from the perspective of rental revenues, is lessened, even if appreciation remains strong.
Is it a good time to buy? My opinion is 'yes.' At today's low interest rates (under 4%), it's a perfect opportunity to get your toe in the proverbial water and in five, ten or 20 years, you'll be very happy you didn't pass up the opportunity...like so many are doing now when they had the same chance a few years ago!
SPECIAL NOTES:
The property price figures for Paris and the Paris region (Ile-de-France) are reported quarterly by the INSEE, the French National Institute for Statistics and Economic Studies. The statistics are released about two months after the closing of the quarter based on the selling price noted on the "Acte de Vente" or sales deed. Given that the properties to which the statistics relate were purchased about three months earlier than the deeds were recorded (the time between the signing of the Promesse/Compromis de Vente and the Acte de Vente), you can assume then, that these figures are already out of date by at least five months.
Other factors that contribute to a variance are: 1) the reduction in the purchase price, which can be attributed to direct payments made to the sales agent (agency commissions) to help reduce Notaire fees,
2) the listing of inventory of fixed furniture such as built-ins and appliances,
3) the under-the-table cash transactions, which are illegal but do occur,
4) and finally, the figures are diluted as they are reported by an arrondissement in its entirety and do not account for differences by neighborhoods or quality of properties.
To read the report in its entirety, download the pdf (in French) here.
Editor, French Property Insider
Email: fpi@adrianleeds.com
P.S. *This beautiful 51m2 apartment with mezzanine in a historic Hôtel Particulier has just come on the market for 730,000€. If you are interested, contact us immediately, as it will be sold within moments!
