Paris Market Update

France during the crisis

Everyone who speaks with us at Flat Hunter wants to know the same thing: “What is the market like right now in Paris? Are prices going down?” We think that you may be surprised at what we have seen.

The market in Paris has not crashed as some journalists may have you believe, nor are prices dropping substantially. In fact the ratio of buyers to sellers remains what is was a year ago or even five years ago. This is because although there are fewer people buying, there are also fewer people selling.

The Parisian market has been protected by taxes levied on investors trying to make a quick turnaround. Anyone selling an apartment that is not their primary residence in the 15 years after buying it is charged a 27% tax on any profit they have made. This has meant that most buyers are purchasing a place to live or a long term investment. The market is controlled by actual demand rather than speculation from investors. A steady 15% of buyers in the market are first time buyers, while other buyers are typically those who are selling an apartment in order to buy a larger apartment or to change location. This remains true now and while fewer people are buying, those who would normally sell to upgrade or move are simply putting their projects on hold and sitting tight.

In addition, the vast majority of buyers in Paris chose fixed rate mortgages which means that they have not been under pressure to sell the way people have in Spain, who, for example, were lured by attractive variable rates that they now cannot pay. This means most Parisians can afford to hold onto their apartments and wait out the crisis while still paying their fixed rate mortgages.

We remain convinced that this is a good time to buy in cash as it means that we can negotiate based on the fact that you are not waiting on an ok for a mortgage. It is also the belief of this company that within the next year or two we will be looking at an international recession which makes property in a stable market a good investment.

It also remains a good time to buy if you are looking for a mortgage due to excellent fixed term rates. In 5 years paying it off will be easy while those who waited for the financial markets to improve will end up with much higher premiums.

We recognize that an extended financial crisis may end up hurting the market in Paris over the next few years, and that prices may fall. We also know of sellers in Paris who have had to sell quickly and so accept a lower price and are more open to negotiations. However, for the moment, the market is mostly stable and only time will tell which direction it will move in, though we at Flat Hunter remain positive.
 

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