Expert Insight, Breaking News, and Insider Stories on Real Estate in Paris
Paris real estate market continues to cool slightly, but still above 10,000 euros per m2
The market is contracting but is still above the average for the past 10 years.
The downward trend in real estate sales continued with 38,060 older homes sold in the Paris region from November 2022 to January 2023, compared to 42,610 a year earlier, a decline of 11%.
The causes of this slowdown have not really changed that much. Loans are now more expensive and more difficult to obtain. Declining household creditworthiness, a difficult economic and geopolitical environment, and high inflation have weighed on demand. However, the volume of sales during these 3 months is still 4% above the average of the last 10 years.
After a favorable period linked to the health crisis and a need for space and greenery, the housing sector is now struggling. Prices are historically high, with increases accumulating over the past several years. Living in a house is also more expensive, with increases in energy prices. Sales volume is down 17% when comparing November 2022 – January 2023 to the same period a year earlier, with little difference between the number of sales in the Petite Couronne (suburbs touching the city of Paris) (-16%) and the Grande Couronne (suburbs further out from the actual city of Paris) (-18%). The number of homes sold is now 6% below the average for the last 10 years.
Paris is still fighting the downward trend of it’s suburbs, with sales volumes that have eroded by 2% in one year yet remain historically very high. The number of apartment sales fell by 8% in the Petite Couronne area surrounding Paris, and by 14% in the Grande Couronne, the larger area even further away from Paris.
According to our leading indicators, these trends will continue in the coming months, with sales volumes still down and the individual house market more affected than the apartment market.
An annual drop in prices is expected in May for apartments with little change for houses.
Smaller home purchases due to budget constraints.
With prices at historic highs and a sharp rise in home loan rates, buyers have undoubtedly had to limit their expectations in terms of the size of their purchases in 2022. The safe haven represented by housing, in a period of crisis, may also have attracted more investors to apartments.
Several movements can be observed. First, for apartments in the Paris region, sales of studios and two-room apartments have increased by 8% and 6% respectively in one year, while those of three-room apartments have changed very little (+1%). Conversely, sales of 4 rooms and more have fallen slightly. In 2022, large apartments with four or more rooms will represent only 25.2% of apartment sales, compared to 26.5% in 2021.
Secondly, in Paris, all apartment sizes saw their number of sales increase. However, the increase is slightly more pronounced for two-room apartments (+11%), perhaps because this type of apartment is suitable for small owner-occupied households as well as for investors.
Third, the decline in sales volumes is generalized for homes but is stronger for homes with six or more rooms. The trend toward larger home sales, which has been observed for many years, is therefore interrupted in 2022. Once again, we are tempted to see this as an effect of financial constraints and of acquisition and occupancy budgets (heating and transportation) that are increased by the current situation.
Buyers have had to limit their expectations in terms of surface area in 2022 due to prices at historic highs and a sharp rise in home loan rates. As a result, the sales of studios and two-room apartments have increased, while sales of larger apartments with four or more rooms have fallen slightly. The trend toward larger home sales, which has been observed for many years, is interrupted in 2022.
Apartment sales by size in 2021 and 2022 in Paris.
Apartment sales by price in 2022 and 2023 in Paris.
Price per m2 in January 2022 and price projections in May 2023 for old apartments in Paris and immediate suburbs touching Paris city limits.