New Political Regime In France Contributes To Recovery Of Prime Property Market In Paris With 5.6% Boost

The prime residential property market in Paris is recovering from several years of muted performance which left prices in the city significantly lower than its global rivals.

According to the latest research, thanks to a new political regime, historically low interest rates and building consumer confidence, the property market has seen a significant turn with prices up by 5.8% in the year to May 2017.

Prices in the 1st, 4th and 5th arrondissements have already exceeded their 2012 peak and this recovery is being driven by domestic demand, according to analysis from international real estate firm Savills.

Foreign buyers accounted for just 9% of the prime market in 2016 for sales above €1 million, and although this is down 14% from 2008, Savills expects overseas buyer numbers to grow in this sector.

They already account for around half of buyers in the ultra-prime segment.

“The new Government will bring clarity on legislation and a period of relative stability. This could encourage foreign buyers who have been waiting on the side lines to act,” the report reads.

The report points out the Macron Presidency is regarded as positive for the market and its pro-business stance could buoy economic growth while the Paris region benefits from a diverse economic base that generates 31% of France’s total Gross Domestic Product.

Sales across the whole market are up 23% in the year to May 2017 and the report explains the prospect of interest rate rises has encouraged buyers to close deals at a time when stock levels have fallen.

In the first quarter of 2017, prices stood at €8,450 per square meter across the whole market and leading indicators from the Notaires suggest prices reached €8,800 per square meter in July 2017, representing an annual price growth of 7%.

In the prime market, prices have grown from a 2014 low, averaging between €12,000 and €17,000 per square meter, depending on the area and the quality of the property while exceptional properties are selling for between €20,000 and €30,000 per square meter.

This movement teamed with the fact that Paris also offers value for money for overseas buyers, as prices in the prime market are 32% below those of the prime property market in London, the market is set to see further improvement.

The report added: “Emmanuel Macron, the French president, and his commanding majority Government, should mean a period of stability for the Parisian residential market. Reduced political risk in Europe coupled with pro-business reforms could result in renewed economic growth and stimulate the residential markets.”