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Real estate: in Paris, the square meter is close to the 10,000 euros mark

The movement of yellow vests affects the turnover of traders on the Champs-Elysees, but not on the price of real estate on the famous avenue or the capital in general. The sluggish social climate of recent months does not seem to affect the Parisian stone market. Prices, which are already at the zenith, continued to gallop at an annual rate of 5.7% in the fourth quarter of 2018, compared to the same period in 2017, indicate figures from the chamber of notaries of Greater Paris, published Thursday.

The median price per square meter now stands at 9570 euros, 21% more than in the second quarter of 2015, underlines the study of notaries. Specifically, for buyers who are struggling to buck their budgets, this corresponds according to the study "To a rise of 1,680 euros per square meter in three and a half years". And it's not over. Projections based on the sales pledges signed in recent weeks anticipate a tariff of 9,730 euros in April. The symbolic bar of 10,000 euros per square meter is not very far.

Graph 1 Tonino paper

Real estate prices in the capital quadrupled in twenty years (2,340 euros / sqm in the fourth quarter of 1998) in current euros and tripled in constant euros, while during the same period, inflation was only 31.9%. The enrichment of landowners is unprecedented. The passage of time and the recurrent imbalance in the Parisian market favorable to sellers due to insufficient supply compared to demand, has kept pushing prices up. Today, nine out of twenty arrondissements have prices above 10,000 euros. The XIXe arrondissement is the most affordable in the capital (7930 euros / m²) while the VIe Borough (the most expensive) is at 13,150 euros. But these are median prices. And depending on the quality of the building, housing, floor and neighborhood, rates can go up much higher. Sometimes, in neighborhoods like Odeon or Île Saint-Louis, they are close to 20,000 euros.

The suburbs of Paris are not spared real estate inflation, especially the three departments of the inner suburbs. In Seine-Saint-Denis, the annual rise in apartment prices (+ 5.6% to 3450 euros / m²) is even "Comparable to that recorded in the capital" point the notaries. The increase was slightly less in the Hauts-de-Seine (+ 4.8% to 5750 euros / m²), and in Val-de-Marne (+ 4.2% to 4470 euros).

Graph 3 real estate paper Paris

In Ile-de-France, to find more moderate price increases and a more affordable square meter, it is necessary to move far away from the center of the metropolis. This is notably the case in Seine-et-Marne (+ 0.2% to 2,600 euros / m²), Essonne (+ 1.3% to 2,610 euros), in Val-d'Oise (+0, 9% to 2,680 euros), and to a lesser extent Yvelines (+ 1.1% to 3,780 euros). But it should be noted that even in these departments, real estate rates have risen for four years. Overheating is global and the market is a formidable machine to gentrify. As prices rise, for housing, some households must go further and further. Yesterday's gentrifiers in some neighborhoods are gentrified in turn, especially if they need to expand.

Graph 4 real estate paper Paris

Despite the overheating of prices, the real estate market paradoxically continues to be dynamic in Ile-de-France. The number of transactions is maintained at a high level, with 177,480 sales recorded in 2018. But nothing would be possible without the banks that have opened the floodgates of credit. Over the past two decades, they have lengthened the lending period to twenty, twenty-five and thirty years so that buyers can borrow more to buy anyway, despite repeated price increases. Now that prices are at the top, brokers are even thinking of going up to thirty-five. These commercial strategies and the low interest rate policy of the European Central Bank have ended up creating real estate bubbles in Ile-de-France, but also the regional capitals (Bordeaux, Toulouse, Lyon, Nantes, Nice …) where flocking assets looking for qualified jobs. Small and medium-sized cities are emptying in favor of large cities. "The concentration of the population in major cities amplifies the lack of available housing in relation to demand. Which drives up prices, analysis Cécile Roquelaure, director of studies and communication at the broker Empruntis.

But the system begins to find its limits: the duration of loans can no longer really be lengthened (by indebtedness over thirty-five years at the age of 35, we finish paying back at … 70 years), the rates that have reached a floor will no longer fall. But prices continue to rise. Therefore, a market block seems to be emerging since buyers can no longer be solvenized to the level of real estate inflation. "We are at a crossroads. We no longer have leverage on credit, recognizes Cecile Roquelaure. The answer is on the price and the supply side. "

What the notaries recognize in words: the "Successive increases in prices accumulate and weigh on the solvency of buyers, particularly in Paris and the inner suburbs", underlines their study.

Tonino Serafini

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