Paris property market slows down

Paris property market slows down

According to report from Lonres, the property market in Paris is slowing down.

The property company reported that after an active start to 2012, driven by the changes to Capital Gains Tax in February, activity in the market has now slowed down, with prime property selling while everything else struggles to shift.

As vendors rushed to sell before February's CGT deadline, stock levels rose, while low interest rates and mortgages combined to make property prices dip by 3 per cent. Now, the market has returned to its previous state, Lonres reveals, resulting in a two-tier market.

Investment in the capital's property is fuelled by the need for reliable real estate as an alternative to the stock markets during the eurozone crisis, but Paris is becoming "unattractive to international investors", leaving the prime market relying upon wealthy French nationals.

"Investing in residential property in Paris is unattractive to international investors as there is so much red tape involved, no tax loopholes to exploit and tenants are legally very well protected. A few trophy properties are purchased by very wealthy overseas buyers, typically Russian or Chinese, but are either used as second homes or left empty for capital growth purposes," commented Lakatos.

"We expect that the residential market in Paris will be fairly flat for the rest of the year and we may even see falls in the region of 1% to 5%," he added.