Are Paris real estate prices decreasing – as some reports are suggesting?
The answer is yes, some districts are, and it’s a situation not seen in our city for at least 15 years. So what is happening?
We take a balanced look at the latest notary findings.
Reports covering the second quarter of 2023
Four times a year the Paris Chamber of Notaries publish their official reports.
These detail the average prices – and number of real estate transactions – for three month segments of the year.
The headline news from the second quarter of 2023 is that average property prices in Paris have fallen slightly. They could even dip below the symbolic bar of €10,000 per square meter, if the downward trend continues.
This is certainly good news for buyers looking to buy an apartment in Paris at this time!
But the drop in prices has affected some neighborhoods more than others. In fact, some areas are still showing growth, albeit slightly.
The bigger picture for Paris
Looking at all of Paris as a whole, the average price of real estate in the city now averages 10,130€/m².
That’s down -1.8% just compared to the first quarter of the year, but down -4.4% compared to this period last year.
When looking at the number of properties sold, the overall volume of transactions is also down. Volume dropped -23% for the quarter, and -6% year on year.
Despite this decline in transactions, the second quarter of the year saw 8,510 sales, which is still significant. This level of sales activity is level with the average second quarter of the last decade – down by just 1%.
However, it’s worth noting that while prices are slightly down in Paris, the capital is still performing better than other French cities, such as Bordeaux and Lyon, and indeed many other markets throughout Europe.
The notaries make a special point in their report to say that Paris is actually the least impacted property market, which is a plus for owners and investors.
A downward trend, but not everywhere
Of course, Paris is a large city with many different areas, and there are huge variations.
Even with the downward trend shown last quarter, some of the more desirable central arrondissements (districts) are showing a modest increase in property prices.
Examples where this is happening include the 8th and 2nd arrondissements, which are slightly up this quarter – by 3.8% and 2.8% respectively – although not up year on year.
Certain highly sought after areas in the 8th, such as the Champs-Elysées quarter where this two-bedroom apartment for sale can be found, have not had enough transactions for figures to even be available.
The Notre-Dame quarter of the 4th and the St Germain district of the 6th have seen the opposite occur – they are up compared to last year by 5.6% and 2.6% respectively. But both are slightly down this past quarter.
Pockets of prime areas such as Invalides in the 7th have seen increases across the board – up 1.5% this quarter and up 5.3% compared to this period last year.
Not surprisingly, prices remain the highest in the city’s 1st to 7th districts. It is these most desirable central areas that traditionally retain their value and are the least sensitive to market fluctuations.
Why are Paris real estate prices decreasing?
What are the reasons for this slight downward trend – and how long will it continue?
The notary reports do give some suggestions.
Ongoing events such as the crisis in Ukraine are continuing to impact interest rates across Europe.
And with the rates rising throughout 2023, reaching as much as 4%, it has an obvious effect on property purchases.
Also, owners with current mortgages in place are less willing to list their properties for sale if they purchased when the rates were low – around 1-2%.
Another factor is that many French banks suspended new mortgage applications this summer.
It’s these new financing conditions that are leading to the decline in the volume of both real estate transactions and prices.
The luxury market is less affected
While the news of Paris real estate prices decreasing might seem concerning, the reality is not so black and white.
Interest rates and other economic factors do not hit the luxury market with the same impact – especially as obtaining a mortgage is often not necessary.
That is why this market segment is even maintaining its growth, thanks to both French and foreign buyers, in the more central districts. This is particularly true in the ultra luxury market of properties priced over €3 million.
Of course, this is positive news for current owners of luxury apartments in Paris, both investors and those looking to sell in the near future.
Predictions for the remainder of 2023
Looking at the notary reports in detail, there is nothing to suggest that there will be a significant drop in Paris real estate prices ahead.
But based on the advance contracts – an indication of upcoming sales for the current quarter of 2023 – a slight decrease is likely.
This could see a drop of the average price to 10,040€/m². That would be down -1% for the quarter, and down -5.3% year to year.
Transactions are likely to be down too.
Even with banks’ profits restored from the higher interest rates, and the credit tap turned back on, it’s unlikely to have enough impact to reverse the trend. Not just yet anyway.
Time will tell, and we will be here with the latest notary reports for the third quarter of 2023 in a few months’ time.
An interesting time to buy
Overall, this is certainly an interesting time to buy in Paris – and a great time for buyers looking to maximize their investment and buy while prices could be a bit lower.
It’s particularly a great time for cash buyers, who are not affected by the rising mortgage interest rates.
Whatever your situation, we are on hand to offer up-to-date advice. So to talk to us about buying or selling in Paris, please do get in touch with our team of real estate experts.