This Paris Life
Expert Insight, Breaking News, and Insider Stories on Real Estate in Paris
Paris Real Estate Market Feels the Olympic Impact.
As the countdown to the 2024 Olympic Games in Paris begins, a curious phenomenon is sweeping through the City of Light: the ‘Olympic effect’ on real estate. While property prices have been on a modest downward trend in Paris, they are holding up remarkably well compared to other major European cities. Experts attribute this resilience, in large part, to the looming Olympic spectacle, which is incentivizing property owners to bide their time and reap the rewards.
While prices have dipped, the decline is relatively modest, defying early projections. Since the start of 2022, amidst a backdrop of climbing lending rates, the borrowing capacity of prospective buyers has plummeted by 25%. The situation shows no signs of improvement, with interest rates steadily inching toward the 5% mark.
Curiously, sales prices seem somewhat disconnected from the budgets of would-be buyers. Some fortunate individuals can afford to make cash purchases. More significantly, potential sellers are apprehensive about parting with their properties, along with the low-rate loans they currently enjoy (ranging between 1% and 2%). Instead, they would be compelled to assume debt at rates of 4% or more to finance their next real estate endeavor. The exception, naturally, is in cases of exigency, such as separation or the arrival of a new family member.
However, according to real estate specialists at Masteos, there’s another dimension to the constrained supply in the market that is tempering the decline in property prices: the Paris Olympics, slated to take place from July 26 to August 11, 2024. Parisians are eager to capitalize on this once-in-a-lifetime event, which promises a surge in seasonal rentals and an increase in property values before they decide to sell.
A study by Deloitte, which we unveiled in April, assessing the economic impact of the Olympics on Airbnb, suggests that approximately 130,000 hosts are gearing up to welcome 560,000 tourists during this period. Among these hosts are individuals with a ‘wait-and-see’ approach, planning to list their properties for sale come September 2024.
As a result, Airbnb has already observed a staggering 3.5-fold surge in nightly accommodation prices during the Games compared to regular rates in the capital. Thierry Vignal, the head of Masteos, points out, “If you multiply this by the number of days of the competition and correlate it with property prices, renting out your apartment during the Games could yield a return equivalent to 4.2% of the average housing price in Paris.” Vignal has encountered numerous clients who opted to postpone their sales to cash in on these lucrative opportunities.
In Marseille and Lille, cities also hosting Olympic events, the percentage of “Airbnb income” relative to property value is slightly lower, at around 2.4% and 1.4%, respectively. This somewhat smaller windfall could be motivating some property owners to delay their sales by a few months.
Above all, property owners are wagering on an “Olympic effect” to boost the selling price of their properties. Historically, the world’s grandest sporting spectacle has proven to be a potent catalyst for real estate markets. According to the Masteos study, property prices have surged by an average of 17% between the year preceding the Olympics and the following year, starting from Sydney in 2000.
Thierry Vignal notes, “For instance, in 2016, Rio had been grappling with a bear market for five years until the Olympic Games intervened and halted the downward spiral.” Even London witnessed a 24% surge in property prices over two years during the 2012 Olympics.
Nevertheless, Vignal cautions against unfettered optimism this time around, citing the unfavorable economic backdrop that could potentially outweigh the Olympic Games’ impact. He concludes, “This sense of anticipation among Parisians may not be justified this time, given the challenging context.”
Ironically, the cautious stance adopted by sellers might inadvertently result in an oversupply of properties hitting the market once the Olympic deadline passes. As the head of Masteos predicts, “With this surplus of properties entering the market at the start of the 2024 school year, the downward trend in prices could intensify.”
Source: https://www.leparisien.fr
Contact Paris Property Group to learn more about buying or selling property in Paris.
Related Post
Stability and favorable economic factors keep Paris in an elite group of world-class cities with vibrant and secure real estate markets that offer both investment growth and enjoyment over the long term. How does Paris compare to other major European capitals in terms of real estate investment potential? What evolving rental market dynamics are impacting […]
The month of February confirms a slowing down in the decline of prices seen over the first thirty days of the year. At least for some parts of the country. Prices in the top 10 cities continued to fall over the past month (-0.1%), but at an increasingly slower pace. For the record, France’s ten […]
The Parisian real estate scene has been complex recently, where the shifts in the market have not not just been a matter of passing trends but intricately tied to the workings of bank mortgage rates. In the current setting, the adjustment of these rates plays a crucial role, serving as a key factor in easing […]
In 2024, expect a faster drop in real estate prices across France. The average price per square meter has already fallen by 1.8% compared to the previous year. This decline is tied to several significant changes in the housing market. The number of home sales has taken a sharp downturn, dipping below 900,000 for […]
In the quest for a home in Paris, there’s a question: What must the seller provide at closing? The main rule requires the seller to give what the sales contract says. Unfortunately, there can be problems, like kitchens without necessary equipment or missing cellars, leading to disagreements. The key part of this property sale process […]
Winter Chill Descends on French Real Estate Market as Top Cities Grapple with Ongoing Price Decline. Paris Sees Unprecedented Monthly Drop; Ile-de-France Region Follows Suit. The price decline that commenced several months ago persists in the French real estate market, casting a shadow over the prospect of improvement. Recent data indicates a year-on-year decrease of […]
Energy-efficiency renovation measures are set to have a significant impact on the rental market in France, with the first rental ban scheduled to take effect in January 2023. However, the implementation of these regulations has sparked confusion and concern among landlords and real estate professionals alike. The French government has consistently maintained its stance against […]
Introduction: Despite a slight upturn in the housing market in May, Spring 2023 in France fell short of seasonal norms. While the nationwide prices stabilized, they lacked the usual dynamism associated with this time of year. This article explores the recent trends in the housing market, highlighting areas of improvement and concerns that continue to […]
The real estate market in France experienced a rare setback in the first half of 2023, marking the first negative performance since 2015. Nationwide, prices declined by -0.4%, raising concerns among industry experts and investors. This downturn was especially surprising given that the first half of the year usually witnesses a surge in activity during […]
For those looking to invest, the spotlight is on the Greater Paris region. With the construction of a new transport network linking the cities and suburbs around Paris, there are endless opportunities in store. From now on, investing in Greater Paris is an excellent idea. However, for this investment to be truly profitable, it is […]
Search
Find us on
Facebook
Get the PPG Monthly newsletter