Expert Insight, Breaking News, and Insider Stories on Real Estate in Paris
2019 rental investment boom in France: buyers up 31.8% in one year
Supported by ever-low interest rates, the number of French people investing in rental property is taking off.
According to the most recent data provided by Century 21, 26.5% of French people who bought an apartment or a house in the first semester of 2019, did so not to acquire a primary or secondary residence, but for investment (and thus rental) purposes. Compared to the first semester of 2018, the increase is 31.8%.
The same is also reported from Meilleurtaux, where “investor files now represent 20% of client stock, compared to 15% two years ago,” attests representative Maël Bernier, who also underlines that, “this phenomenon involves everyone, from white collar workers to retirees, and includes middle and working class individuals.”
Even low income households taking advantage
Historically low interest rates, which continue to drop, allow for an ever-increasing number of households to prove their solvency. “Where once it was necessary to earn €3,100 per month to be able to solidify a loan application, monthly incomes of €2,800 will now suffice,” estimates Maël Bernier.
As a result of these low interest rates, the economic equation tied to rental investing is all the more easy to settle, as the mortgage is most often covered by the tenant’s rent.
Burned by fluctuations in the stock market and the weakening of the Livret A savings accounts, French people realize that real estate is the safest bet because they can leverage gains by taking on debt, and being reimbursed by their tenants.
A winning bet if reselling
Although this phenomenon has spread nation-wide, rental investment is even more popular in cities where prices have literally exploded, like in Paris, where the average price per square meter has exceeded €10,000 per square meter, or in Bordeaux or Lyon. And for good reason: it’s become nearly impossible to acquire a property that’s of a decent size for your household, and although the percentage of owners who live in their rental properties is 58% at the national level, it falls to 34% in Lyon, 33% in Paris, and 32% in Bordeaux.
In these large cities, a new category of investors has thus been born: unable to afford a primary residence, they continue renting, either in the public or private sector, and buy a smaller property to rent out. Even if they must resell earlier than planned, they are almost certain to not lose money, as prices haven’t stopped climbing.
“As a result, everyone wants to be a part of it,” smiles Sandrine Allonier, representative at Vousfinancier. Knowing that this investment must be made wisely, especially in regard to the location chosen, don’t hesitate to contact a professional before you start. Paris Property Group specializes in assisting international clients to buy or sell property in Paris wisely.