As the dollar overtakes the Euro for the first time in 20 years, we take a look at what this means for American buyers.
It’s interesting news for those looking at the Paris property market from across the pond.
$1 = €1 began this summer
Earlier this summer, the US dollar started to show parity with the Euro. This means they exchanged at a one-to-one rate, so one dollar exactly equaled one Euro.
In recent weeks, the dollar has grown even more, overtaking it. So at the moment, Americans traveling to Europe are getting more Euros for their dollars.
It’s the first time the currencies have been this way for two decades, when the Euro was in its infancy. Parity was first reached just after the currency’s virtual launch in 1999, and then again after the introduction of Euro coins and banknotes in 2002.
In basic terms, a stronger dollar is good news for Americans wanting to take a vacation in Europe or make purchases here.
And this includes real estate.
Source: Macrotrend
The reasons this is happening
The Euro started to lose ground against the dollar earlier this year, due to a combination of factors.
The conflict in Ukraine is affecting energy prices in Europe, while new inflation-fighting measures made by the US Federal Reserve have played a part too, as they raise interest rates for Americans in response to rising inflation.
This may be why the dollar is hitting 20-year highs against other trading currencies too. This includes the British pound, which has also lost 12% of its value against the dollar this year.
This means it’s not just a case of the Euro being weaker, but also of the dollar’s strength at this time.
So it’s an interesting time to be an American buyer of real estate in the French market – your dollar is going to stretch further.
One of our search clients recently saved 10% since their offer was accepted in March. At a property price of several million Euros, this is a considerable bargain for them, thanks to the current situation between the dollar and the Euro.
What about property prices as the dollar overtakes the Euro?
As the dollar overtakes the Euro, real estate prices in Paris are flattening – very slightly.
This is the first time prices have leveled this way since 2015.
According to notary reports, in the first quarter of 2022, the average price for a Parisian property fell by 1.2%. That’s an average price of 10,500€/m² at that time.
This slight stagnation of prices is due to various factors once again, such as the recovery of the Covid-19 pandemic, the recent French elections, and some economic uncertainty.
As a result, owners were possibly holding off on selling their apartments, a situation we expect to see reverse itself this fall.
But in a positive trend, we can see that by the second quarter of this year, prices are already slightly up once again and showing an increase of 0.7%.
Real estate remains a sound investment
As the dollar overtakes the Euro, sources still indicate real estate in Paris remains a sound and appealing investment.
Bank interest rates remain low here in Europe, and the stock markets are in flux. Even mortgage interest rates are low, just now exceeding 2%, so it’s certainly an interesting time to purchase a Parisian property.
Just one example of an apartment currently on our books is this sunny two-bedroom in the Cardinal Lemoine area of Paris’ 5th arrondissement (district).
Set in the historical center of the capital, it makes an ideal pied-à-terre, primary residence, or rental investment.
More updates from 56Paris
We’ll continue to share the latest news on events of interest to our American buyers in this blog.
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Or if you would like to speak to a member of the 56Paris team about any aspect of our real estate market, whether that’s buying, selling, or renting, please don’t hesitate to get in touch.