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Paris real estate prices rise, defying predictions
Real estate prices are rising in Paris, though property sales throughout France have slowed in the second quarter of 2012. In contrast to Paris, prices are generally slightly lower elsewhere in France.
Paris is definitely not France. Whereas across the country, the real estate market gives clear signs of a slowdown in sales accompanied by stable or slightly declining prices, the capital still shows gains. According to statistics released by the Notaries of Paris and Ile-de-France on Thursday, the average price per square meter in Paris rose 1% in the second quarter of 2012, to 8340 euros, only slightly off the record third quarter of 2011 (8370 euros per square meter). It is likely to exceed 8500 euros this month according to projections made by the notaires on the basis of upcoming sales.
Yet sales volume was significantly off during the second quarter in Paris and elsewhere. Transactions of existing apartments in Paris plunged by 22% compared to last year, compared to 18% in the suburbs surrounding Paris and 23% in the outer suburbs. In some parts of France, such as the Val d’Oise, sales of old and new apartments plunged by 35% and 40%.
Under these conditions, the price stability has notaires perplexed. “There isn’t a correlation between price and sales volume,” said Thierry Delesalle, a notary in Paris, in the past the sales declines went hand in hand with lower prices. However this time, he says with declining tax incentives and the political and economic uncertainty in the second quarter, many sellers have left the market.
Prices jump more in the coveted neighborhoods
The average annual increase in prices was limited to 2.5% in the capital against 1.9% in Ile-de-France and prices were perfectly stable for the rest of France (0% year over year and 0.3% in the second quarter 2012). For the first time in years, some districts have seen their prices decline year over year: -0.2% in the twelfth and -2.5% in the fourth. Despite this, prices in the sixth (Saint-Germain-des-Prés) climbed another 7.2% to 13,200 euros, while the seventh jumped 6.7% to 12,350 euros.
These statistics match the current perception of real estate agents in Paris. sales are plummeting, transaction times stretch but prices still resist especially in the districts most sought after. Buyers now have more leverage to dictate terms but many sellers would rather withdraw from the market than drop their price.