And if the prices of Parisian real estate were (already) to go up?

And if the prices of Parisian real estate were (already) to go up?

The urban exodus, at least in Paris, is already a thing of the past. With more than 40,000 sales in 12 months at the end of June 2022 (latest official statistics from notaries presented on Tuesday), real estate transactions in the capital have reached a level not seen for 20 years. For the disenchantment with Parisian life, it will therefore be necessary to go back. And the prices? Admittedly, they are still showing a very slight drop (-0.8% over one year at the end of June) but it is slowing down (it was 1.2% over one year at the end of March). And in the second quarter, we even obtained a slight increase (+0.7% and +0.1% in data adjusted for seasonal variations). And according to the leading indicator for pre-contracts, the current average price of €10,590/m² at the end of June could rise to €10,670/m² in October. A further increase of 0.6%.

An “insolent form”

While the reversal of the market trend – with an expected fall in prices and volumes – is on everyone’s lips, Parisian notaries believe that a return to the rise is not excluded in the capital. They are not kidding themselves about the current situation, however. “We have a lot of very dark cloudsrecognizes Me Delesalle. With inflation totally decorrelated from wages, it is true that purchasing power takes a hit; money is more expensive and above all more and more difficult to obtain…» But despite these elements and also the fact that the shocks on the world economy are likely to accentuate the difficulties in the coming months, the notary Marc Friedrich could only welcome the “insolent form” of the Parisian market.

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Photo credit: Notaries of Greater Paris

Without considering that this return to the increase would be desirable in view of the current difficulties, the notaries recalled that the 6th and 7th arrondissements have now crossed the bar of 14,000 €/m² with respective increases of 7.8% and 5. 4%. It turns out that these two arrondissements with the 8th (up 4.2% to 12,030 €/m²) are also the most popular with foreigners, which is no coincidence. In the 7th, non-resident foreigners accounted for 19.9% ​​of transactions in the 2nd quarter, almost as much as in the 6th (18.4%) and the 8th (16.3%) against only 8.9% on average in through the capital. Between the desire of foreigners to return to Paris and the advantage provided by a weak euro, “the dollar and the pound boast in Paris” according to Me Friedrich, foreigners could continue to maintain this high price level.

It’s hard to imagine falling below the 10,000 €/m² mark when you know that the share of transactions carried out below this price is only a minority in 5 arrondissements (the 12th, 13th, 18th, 19th and 20th) and exceeds the 90th % in 5 others (Paris Center including 1st, 2nd, 3rd and 4th and 5th, 6th, 7th and 8th). As for exceptional transactions, they exceeded 36,000 €/m² for at least two of them during the 2nd quarter, for very large areas (310 m² in both cases) in the 5th and 16th arrondissements. “The relative price stability has made investors return to all types of Parisian surfaces, believes Me Delesalle, making full use of the concept of stone-refuge. And many of them think that it is still time to borrow before the increases to come. And so, these record volumes could lead to further price increases, with the capital regaining its status as the locomotive of the real estate market, which it ceded to the province for months.

Photo credit: Notaries of Greater Paris

An analysis that many other specialists do not seem to share. Éric Allouche, president of the ERA Immobilier agency network, believes that the market slowdown should continue and intensify. “We are going to witness a stagnation in prices between now and the end of the year, in volumes which nevertheless remain quite significant since real estate remains a safe haven”, he believes. As for the estimation site Meilleurs Agents, it predicts a 3% drop in prices in Paris for the coming year over year, estimating that the capital will experience a “strong oversupply“and markets”very vulnerableto current credit restrictions.

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