If you’re a regular reader of the 56Paris blog, the news that Paris real estate prices decreased last year isn’t too much of a surprise.
But the latest reports shed more light on the slight trend we’re seeing – and there is still promising news for both property owners and investors.
We take a closer look at the real picture, which shows a more nuanced market.
The latest from the notaries
Every three months, we examine the financial reports from the Paris Chamber of Notaries.
These detail all the real estate transactions from the previous quarter – how many properties sold and how much they sold for.
It gives us a solid indicator of the market, along with some predictions for the future.
So here’s the headline that we’re reading – Paris property prices decreased last year. But by how much?
Overall, average property prices in Paris decreased by 3% in the fourth quarter of 2023, compared to the previous three-month period.
This brings the average price to €9,770/m², down 6.8% year-on-year.
It’s a phase of gradual price erosion, following the second quarter of 2023 (-4.4% year-on-year) and then again in the third quarter (-5.4% year-on-year).
As we would expect, the decline in prices comes with a decrease in transaction volume. In 2023 there were 32,000 sales, a decrease of -22% compared to 2022, and -6% compared to the average over the last 10 years.
Price predictions for 2024
While it’s already March, we don’t have data for first quarter 2024 transactions just yet. But the notaries do make some predictions for the year ahead.
According to the advance indicators on pre-contracts, the downward trend will continue into the spring.
The same reports predict an average price of €9,410/m² by April 2024 which would be 8.1% year-on-year.
If this happens, property prices will return to the same average as those in summer 2018.
Beyond that, Olivier Clermont, a spokesperson for the Paris Chamber of Notaries, is on record as saying “the fall in prices will continue, around 2% to 3% over the whole of this year.”
Why have Paris real estate prices decreased?
The housing market is complex and affected by a range of external factors.
The main consideration right now is rising interest rates. As they continue to stay high, it makes financing property purchases more expensive, with higher monthly repayments. This impacts buying power and dampens demand.
But the Observatoire Crédit Logement/CSA (Housing Finance Research Institute) predicts that interest rates will drop from their current average of 3.5-4% to 3.25% by the end of 2024.
Interest rates for non-resident buyers are normally somewhat higher. They are widely expected to drop from their current average of 4-5% to a range between 3.5% - 4%.
Of course if you’re a cash buyer, this isn’t a consideration.
Another reason Paris real estate prices decreased is the current ‘wait-and-see’ approach many buyers are taking. Again, this is a response to the rising rates and price fluctuations – some buyers sit back in anticipation of potential further price drops.
This cautiousness further contributes to the slowdown.
American buyers – a special case?
There is an interesting anomaly in the latest results – parts of central Paris where prices are holding and even growing.
The reason? Foreign buyers without mortgages, especially Americans.
Looking at the past year, purchases made by non-resident foreigners increased by 4% to 970 sales. That’s a record level.
And while 62 different nationalities purchased in Paris last year, Americans are way out on top – 25% of non-resident foreign buyers in Paris are from the US.
The favorite neighborhood for Americans is the Notre-Dame quarter in the 4th district, the city’s most expensive. This is one of the few areas where prices have actually increased – up by 15.7% for the year.
Many are cash buyers, so unaffected by the current interest rates.
The quarter encompasses the part of the Ile de la Cité where the Notre Dame Cathedral is located, and the entire Ile Saint-Louis.
This highly-prized area will also benefit when restoration work is complete on the Notre-Dame cathedral, possibly making it even more attractive.
Paris is a two-tier market
Let’s take a closer look at the results across the different arrondissements (districts) of Paris. The notary reports give overall averages and don’t show the complete picture for all real estate.
While a downward trend is evident across the city, the central districts are still resilient – and react differently than other areas. This is something we discussed in an earlier blog.
Interestingly, with the exception of the 5th, districts 1 to 8 have experienced the smallest price decreases, all falling under 5%. This suggests a level of relative stability in these central areas compared to the outer arrondissements.
The most expensive district remains the 6th at an average price of €13,840/m² – this is 1.75 times more expensive than the 19th, the cheapest district.
There are even pockets of growth here – such as the Saint-Germain-des-Prés neighborhood, which at an average price of €15,500/m² is up 4.4% this quarter, and up 18.7% over five years.
We currently have this one-bedroom Saint-Germain apartment for sale, situated on the 4th floor of a period building without elevator, ideally located between the Seine and Boulevard Saint-Germain.
Other areas are showing growth too. In the 7th, the Gros-Caillou district is up, albeit slightly, by 0.3% this quarter.
Throughout the city, exceptional properties in perfect move-in ready condition command prices above the notarial average.
We have an exceptional Musée d’Orsay one-bed, one and a half bath apartment for sale, nestled in the coveted antique dealers’ area. On one of its most sought-after streets, the renovated turnkey property sits on the third floor of a well-kept Haussmann-era building with elevator.
Prices in both the 2nd and the 4th districts also increased slightly, 1.5% and .2% respectively. Certain quarters, like the Arsenal in the 4th, increased significantly. It now has an average price of €14,570/m². That’s growth of 14.6% over the past quarter, and 26.8% over five years.
Beyond the statistics
Of course, statistical averages don’t always reflect the true picture.
As mentioned earlier, the prices listed in the notary reports are net seller prices. This means they don’t consider agency fees.
Some examples in our current portfolio of properties for sale include this sunny Montparnasse one-bedroom apartment on the Left Bank in the 14th. This pied-à-terre is versatile, perfectly suited for use as a primary residence, or a rental investment.
Also, this Arc de Triomphe two-bedroom apartment with air-conditioning in the 17th district. Set near the iconic Place de l’Etoile and the Arc de Triomphe, the property boasts three balconies. The legendary Champs-Elysées with its many shops and cafés is close by.
56Paris is here to help
We expect the market to continue to adjust in the coming months, presenting a good opportunity for buyers.
But in the longer term, the foreseen decline in inflation and predicted improvement in financing conditions should give positive signals to the market, and make activity more fluid.
We work with a range of clients, helping them find their ideal Paris property, so why not get in touch with the 56Paris team?
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