As the real estate market tenses, Paris becomes less attractive

Has the price per square meter, yes or no, dropped below 10,000 euros in Paris? The question has been agitating real estate professionals since two brands, Century 21 and Orpi, announced in mid-October the crossing of this symbolic threshold. “The Parisian market is not going to collapse, but it is adjusting downwards”points out Charles Marinakis, president of the Century 21 network, who, based on his sales, saw the average price per square meter (m2) fall by 5.7% since January in the capital, to now stand at 9,758 euros (compared to 10,348 euros on 1uh January).

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This finding is not unanimous. Thierry Delesalle, president of the commission of statistics of notaries of Greater Paris, thus notes prices at 10,600 euros per square meter on the promises of sale signed in August. “Century 21 does not see luxury transactions passing”, advances as a possible explanation Thomas Lefebvre, scientific director of the real estate data aggregator Meilleurs Agents. Or wealthy foreigners, who had turned away from the Parisian real estate market at the start of the health crisis, have returned to the beautiful districts of the capital, taking advantage of the weakness of the euro. In the 7e district, one in five apartments had been purchased by a foreign buyer during the first six months of 2022 (compared to 13.9% for the year 2020).

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According to figures from Meilleurs Agents, prices in Paris at 1uh October would be close to 10,400 euros per square meter, but “the cycle is changing”, believes Thomas Lefebvre. In September, the price fell in the capital by 1.2% year on year, according to data from the site. And compared to the summer 2020 peak, the drop would reach 3%. The specialized site expects Parisian prices to drop below 10,000 euros per square meter, but rather in 2023.

Rise in rates

“We come from a world where prices have been increasing almost everywhere in France since 2015, a period during which central banks implemented extremely accommodating monetary policies, offering exceptional financing capacities for buyers, with rates of mortgage loan below 1% », emphasizes Thomas Lefebvre. These very favorable conditions “financed the price increasehe continues. Today, we are starting to see the effects of the rise in rates on the Parisian real estate market”.

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According to the latest available estimates from the Banque de France, loan rates (excluding fees and insurance) in fact rose from 1.19% to 1.72% between April and September. The rates offered by the banks would even reach 1.98% in September for loans with a term of twenty-five years, according to the Observatory Credit Housing CSA. “The increase in interest rates has caused a rapid deterioration in the ability of households to buy”, complete the observatory. According to his calculations, the purchasable surface would have fallen by 4 m² over one year on average in France.

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