Paris house price loss augurs well for provincial gain

House prices within central Paris have fallen as owners search for an exit to greener locations and foreign investors hold out for bargains.

Paris property prices have taken a slight hit as money moves out of the capital into the provinces. REUTERS/Philippe Wojazer

Data released by the notaries of Greater Paris - which registers sales - shows that by March the average price of a square metre will be around 10,700 euros. In November the figure was 10,850 euros.

"The coronavirus pandemic and the first lockdown led many people in cities to think about their surroundings and it was even more the case in Paris," the notaries said in their quarterly survey of the national sales market.

"Parisians have been moving out to regions just outside the city such as Normandy, the Perche and Burgundy."

Consequently as prices fall in the city they want to leave behind, prices in Burgundy, for example, have risen.

In January 2020, a prospective buyer had to pay 1,310 euros a square metre for a house. By the end of the summer, the price had risen to 1,750 euros a square metre.

Buying power

Even with the slight drop in Parisian prices after 15 years of rises, the 770,000 recouped from the sale of a 75-square metre flat in the Chateau D'Eau village of the 10th arrondissement could furnish a chunky slab of bucolic idyll in northern Burgundy.

But even before the pandemic driven flight from Paris, the city seeped citizens on a regular basis due to factors such as unavailability of suitable apartments and flats being left empty or used as a pied-à-terre.

Between 1968 and 1999, the population fell in Paris from 2,600,000 to 2,125,246, according to figures collated by the Paris Urbanism Agency (apur).

There was a rise between 1999 and 2012 and when apur's study was completed in 2017, Paris's population of 2,187,526 was about the same as in 2007.

Change

The demographics are likely to change again as the impact of the coronavirus pandemic continues with highly contagious variants and hard-nosed investors wait for the slump.

In 2015, say the notaries, non-resident foreigners made up 17 percent of the buyers in the 6th, 7th, 8th and 16th arrondissements.

By the end of the third quarter of 2020, they represented only 9.4 percent of the transactions.

Banks might also be fuelling the drop in prices. According to real estate agents in Paris, the rate of credit refusals has risen from 10% of applications to 15% in one year.

And with the government urging companies to promote teleworking, cheaper properties outside a city robbed of its cultural attractions become logical.

"It has often been argued that a downturn in the market in Paris heralds a national decline of the real estate market," added the notaries' quarterly survey.

"But the health crisis makes this assertion less certain. It would therefore not be a market reversal but rather a displacement market towards a real estate closer to nature; more provincial with more space."