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France real estate prices: a quiet start in 2019
Although housing prices in France’s largest cities are still on the rise, the national average is hampered by price decreases in the rest of the country.
Focusing on Paris and France’s largest cities, we often forget about the price stability apparent in France’s many provincial regions. Admittedly, the real estate price index (IPI) of housing for the ten largest cities in France is still rising by 0.3%, ”but if we refine the observation, we see that prices are falling in 53 departments out of 94,” says Thomas Lefebvre, Scientific Director of MeilleursAgents. On average, French property prices remain fixed at 3,349 euros per square meter for apartments and 1,895 euros per square meter for houses.
The effect of the gilets jaunes protests
The nationwide gilets jaunes protests are not helping real estate prices. According to MeilleursAgents, “protests and blockades have led to a significant delay in property sales according to our partner agencies (property visits made difficult or impossible to get to, closings postponed…)”. The real estate website predicts that transaction volumes will certainly suffer from this situation. However, this does not mean that the real estate market as a whole will negatively be affected.
The most essential supporting factor in the French real estate market today, very low interest rates, still prevails. In addition, French banks typically start the year with high loan goals, making it easier to obtain a loan at the beginning of the year.
However, despite these attractive rates, MeilleurAgents’ forecasts for 2019 are mixed: “We expect a contained decrease in transaction volume (from -5 to -10% compared to 2018) and a slight increase in prices in Paris and major cities, in line with demand that is limited by current economic and social situations,” says Thomas Lefebvre. In France’s largest cities, the expected price increase in 2019 is 2 to 4%.
Where are Parisians going?
While Paris real estate prices are still rising (+0.3% in January 2019, and 5.2% over a year), the city is paradoxically losing inhabitants. It now costs on average 9,445 euros (but much more in some arrondissements) per meter square in Paris.
The first reflex of buyers, put off by these prices, is to migrate to the less expensive suburbs – the petite, even the grande couronne. These adjacent markets therefore indirectly benefit from the Parisian increases. Prices in les Haut-de-Seine, for example, increased by a further 0.3% in January (+2.2% year-on-year). From Seine-Saint-Denis to Essonne, including les Yvelines or Val-de-Marne, many departments posted a 0.2% increase over the month. The only exceptions are Val-d’Oise, down 0.2% in January (but up 2% year-on-year) and Seine-et-Marne, which remains stable (but up 1.5% year-on-year).
The attractiveness of provincial metropolises
More and more inhabitants are no longer choosing even the adjacent suburbs where the quality of life leaves something to be desired. Many former Ile-de-France residents opt to head farther away, to the most dynamic large cities elsewhere in France. These migrations, of course, have an impact on prices. Most noticeably in Bordeaux, where prices have calmed down after record increases (+17%) in 2017. Since then, prices have fallen 1.2% year-on-year (as of February 1st, 2019), while picking up again, with an increase of 0.5% in January 2019. The leading provincial cities today worth noting are Lyon (+1.1% and +8.9% over one year) and Nantes (+1% and +6% over one year). On the other hand, Nice (-0.6%), Strasbourg (-0.5%) and Montpellier (-0.4%) have begun the year on a decline.
|Apartment prices in major French cities as of February 1st, 2019
Apartment prices in Ile-de-France as of February 1st, 2019
Seine-Saint-Denis : €3,719/m2
Cover Photo by Mrtnklr [CC BY-SA 3.0]