Paradoxical French market: housing prices are low and demand is high

Paradoxical French market: housing prices are low and demand is high

A paradoxical situation there is on the market of residential property in France. Low interest rates triggered a surge in sales, the most significant in the last 10 years. However, prices remain low.

According to the latest report from the notaries, in the second quarter of 2016, the cost per square meter in France fell by an average of 0.4%. Upon closer examination it appears that the overall picture of the market is very heterogeneous. In Paris, there is a slight price increase. Real estate prices on the Cote d'Azur continue to rise. And in Sunny Occitania (South of France) there was a lull.

CBRE on the development of the real estate market in France

The head of the Paris office of CBRE Sebastian Lorrain also marks the increase in buyer activity in the capital region in the beginning of the year. The main reasons are a combination of affordable prices, low interest rates and moderate economic improvement.

"With the end of the summer we began to notice how consumers are gradually returning to the market, he says. – Prices fell by about 7% over the last 5 years. Interest rates are at historically low levels. Over the past several years when home sales were very slow, has accumulated a lot of vacant properties."

Prices vary between €5000 per sqm in the suburbs of Paris and €3,500 per sqm in other cities. According to CBRE, the increase in the cost per square meter is not yet typical for the Northern and Eastern regions of France, less developed from an economic point of view. Prices there continued to fall throughout the first half of the year. In sparsely populated inland areas is the maximum number of empty unsold property.

According to the National statistics Bureau Insee now 2.88 million properties in France remains vacant, which is 8.2% of the total housing stock. 10 years ago vacant housing was less by nearly 1 million.

The opinion of the representatives of Knight Frank

The head of research department of Knight Frank France Cyril Roberts notes that the increase in the cost per square meter is typical for new housing market. The government stimulates the construction sector by special tax policy. New homes are supposed to eliminate the housing shortage that exists in rapidly growing areas.

According to Roberts, the most developed sectors are the area of Paris, the West coast and the Mediterranean. The representative of Knight Frank believes that the French luxury real estate remains a safe investment. With regard to commercial real estate, the Paris region has much more weight. Even such large regional centers like Lyon, Bordeaux and Marseille are only a small part of the overall market.

Text – Alena Eliseeva, ee24