Low interest rates in France sustain demand for properties in Paris

Mortgage interest rates in France remain at their lowest for years at around 3%. French property experts consider that this helped to sustain the market for older properties (as opposed to new construction) in 2013.

Demand in Paris has remained higher than in some provincial areas and the price gap per square meter has widened. Notaires de France (the representative body of the officials who handle property transactions) regularly publish comprehensive figures on prices and numbers of transactions. These show that the number of property transactions in Paris during the third quarter of 2013 increased by 13% over the same period in 2012.

In terms of price movements, there is considerable variation among arrondissements (districts). Having declined in the first two quarters, property prices for the whole of Paris increased by 0.5% during the third quarter of 2013. But some central arrondissements showed larger increases during that period, such as the sought-after 6^th arrondissement, where prices went up by 4.9%.

We reported on the prospects for French mortgage rates in early January. The signs were that they would remain at their current low rates, or even fall, in 2014. That trend is confirmed by the European Central Bank’s (ECB) recent decision to retain the base rate at 0.25%, owing to falling inflation. The Eurozone inflation target is 2% but the December 2013 figures showed a rate of 0.8%, down from 0.9% in November.