Paris: a stable real estate market all its own

In the world capital that is Paris, real estate is in a league of its own.  Incomparable to what’s available in the rest of the world, it forms its own micro market with distinctive characteristics that add to its stability.

“For years now, everyone has been saying that prices and volumes are rising. I’m a little embarrassed that I keep having to repeat this same story over and over again… So this time, I’m going to forecast a big market crash,” joked Charles-Marie Jottras, President of the Daniel Féau Group, at the beginning of his annual conference on market trends. Calling out those who’ve been anticipating a market crisis for the past two or three years, Jottras made it clear that the Paris market is far from a crash.  He wanted people to understand that Paris doesn’t obey simple price/income ratios like other markets might.

“Paris is a global city, it can be compared to London, New York, Singapore… it is a market apart,” confirms Stéphane Adler, Vice-President of the Paris Chamber of Notaries. “A crisis in 2020? You make me laugh,” says Nathalie Garcin, President of the Emile Garcin Group.  “There is no bubble! Paris is expensive because demand is strong and supply is very limited. Although I don’t think prices will continue to rise as fast as they have in recent years,” she notes.

Prices have more than quadrupled in twenty years, despite two downward periods: a fairly short one between 2008-09, and a longer one, from 2011 to 2016.  There was also the housing crisis between 1991-1998, which was more severe in Paris than in the rest of the country.  According to the INSEE-Notaires price index, the drop was 30% on average.

Another important fact: behind the impressive €40,000-per-square-meter record that the Paris luxury market boasts, lies a tiny micro-market.  Around 3,000 apartments are sold for over €1 million each year (which accounts for 8% of transactions), including 500 that are sold for over €2 million.  Average prices in this sector are dizzying: €13,474 per square meter for properties between €1.5 and 3 million (an annual increase of 7.5%) and €18,423 per square meter for properties over €3 million (+ 3.6%), according to data from Féau. As Thierry Delesalle, Paris notary, points out, “These days, only senior executive couples can consider an acquisition in the capital, and even then, most of the time they must resell a property in order to buy the new one”.

“In the ultra high-end luxury real estate sector, transactions are between €20,000 and 30,000 per square meter,” observes Nathalie Garcin. “Flawless apartments in the nicest Paris neighborhoods are very rare, therefore highly sought-after, and ultimately very expensive,” she notes.

Structurally fixed supply

Paris is unique in that annual sales numbers in the capital hardly vary at all, having rested between 33,000 and 35,000 for the past twenty years, while demand has steadily increased. “Supply is structurally fixed in Paris, much more so than in other global cities,” notes Féau’s president. It is easy to conclude, then, that prices can only increase, especially since Paris is at the center of economic decision-making in France and is increasingly seen as the world’s leading tourist destination. What’s more, Stéphane Adler notes, “Brexit has encouraged many French expats to leave London in the last two years. They have high purchasing power in the €2 million property range.”

“The most flagrant imbalance between supply and demand concerns, by far, the three-bedroom family apartment between 130 to 150 m2,” explains Charles-Marie Jottras. “You won’t find any in the ads,” he remarks. “They’re snatched up right away.”  Jottras goes on to cite an unbelievable tidbit of data: “For each apartment of this type that enters our system, we have more than 4,000 buyers who might be interested.”  He estimates that about 40% of the apartments sold by his agencies this year were sold directly, without any web advertising. However, “for properties between €750,000 and 1.5 million, part of this pressure will be released with the construction of Grand Paris.”

For this upcoming year, real estate specialists seem to agree that the Paris market will continue on its unbalanced way, “not including any inevitable fluctuations,” Jottras adds.  “But in the long term, I remain very confident about the trend… there is no bubble,” he declares.  The same goes for the Paris Chamber of Notaries, whose VP Stéphane Adler believes that, “the market is neither artificial nor speculative like it was between 1990-91. It is a market of scarcity.”

Source: Paris : une offre immobilière plus figée que dans les autres capitales