It seems as if the spectacular price rises in Paris are at an end, as the last two years have brought larger gains than those seen in New York and London. Now it looks like buyers have finally had enough.
Prices here fell by an average of 3% during the first five months of this year, according to Databiens, an index based mainly on the more affluent western districts of the city. Although it’s the only index to register a price fall there are other signs that the number of transactions are down and properties are taking longer to sell.
Now the influx of money into the city, which must have seemed limitless, is slowing, and the numbers of apartment offered at a discount is increasing.L
Property prices in the French capital increased by a spectacular 20% last year which is the biggest annual increase in at least 20 years. Increased demand led to record prices as fewer owners chose to sell. There were just 2,785 new homes built in Paris last year.
As higher interest rates start to bite, the cost of buying a home in Paris is forcing many first-time buyers to look towards lower-priced neighbourhoods in the north-east of the city or in the suburbs. Buy to let investors are also beginning to shun the city as higher prices equal lower rental income returns.
At the end of 2010 the average price of a Paris apartment was €9165 per square metre. By the end of May this figure had dropped to €8885 per square metre. According to the Paris Chamber of Notaries, the number of properties sold during the first quarter of this year was down 12% on figures for last year.
Visit the original news source, Simon Packard at Bloomberg