An Interview with Jérôme Martinet, founder of Flat Hunter® and pioneer of the property search business in France
The prices in Paris continue to climb, unlike in certain regions in France where the prices are decreasing, especially for newer buildings and developments. The Parisian micro market is not expandable due to the lack of developable land (Paris is 15 times smaller than London but only 3.5 times less populated) and the restrictions on construction heights due to protected or classified buildings. Very few new units see the light of day and consequently the demand remains far superior to what is on offer in the Parisian micro market. Despite the recent “wait and see” attitude, housing needs remain to be met in the capital and prices continue to climb, especially for prized neighborhoods and a general decrease does not seem at all conceivable.
Already French buyers are becoming younger and younger, birthrates are higher, there are later marriages and more divorces (France has 2.5 times more single-parent families than 40 years ago!), there is a longer life expectancy, a loss of confidence in retirement funds, and numerous fiscal advantages to buying in a country that lacks over 800000 housing units!
When speaking specifically about Paris the housing crisis becomes even more evident as it’s a capital city where residents tend to lead privileged lives and the dense economic fabric attracts people from all over the world, from students to professionals and tourists: everyone, or almost, would like to live or dreams of stepping foot in Paris.
Even if prices increased considerably, Paris remains less expensive than London, New York, or Tokyo.
If the crisis reached Paris then the scenario would be something like this: In the central arrondissements (where the demand is 10 times higher than what is available) the prices will not lower. If you compare the number of apartments for sale between the first 8 (1-8th) arrondissements and the last 12 (9-20th) there are 10 times less properties for sale in the first 8 and yet 3 times more buyers. In addition, quality apartments (high ceilings, balcony/terrace, calm, quiet, lots of light, etc.) are not very different in price from the lower quality apartments (dark, noisy, lower floors) in the same area, indicating that if the crisis reached Paris this gap would simply grow at a faster rate, and the value of quality apartments would continue to rise. On the other hand, properties in less desired neighborhoods with and without defects will be at risk of going down in value.
We tell our clients that when thinking about their investment portfolio and in order to invest intelligently, they should buy apartments of quality with the minimum amount of defects and in central neighborhoods (1-8th arrondissements) or on a greatly desired street (local micro markets).
In this market where there is not enough to supply the demand, these apartments are the most expensive, but their value is stable and they will most certainly increase in value in the short to midterm future. In addition, these markets remain excellent investments for people who would like to rent out furnished and short term housing to tourists.
