Soaring property prices in Paris create real estate bubble fears
Property prices in Paris are soaring and a new law requiring all sellers in France to produce an energy report could result in a temporary lack of stock as the sector gets used to the change.
The new rules for the DPE report to be in place before a property is marketed come into force on 01 January. But estate agents say that not all sellers are yet aware of the requirement.
‘It could mean that there will be fewer properies for sale under everyone catches up,’ said a spokesman for Century 21.
‘If there are fewer properties around it could mean prices rising as buyers compete,’ he added.
The prediction comes as the latest figures from the Paris Chamber of Notaires show that prices for Parisian property are up strongly. The average property price has for the first time broken the €7,000 per square meter barrier. Its third quarter report also shows that transaction are up 23% since the same period last year.
Strong demand from overseas buyers, especially from Chinese and Italians, is pushing up prices in France’s capital city, according to the chamber’s president, Christian Lefevre. He added that the cost of lending is low in France and there is also a shortage of supply.
Overall the price of non new properties in the Ile de France is up 10.6% on a year ago. This follows a 4.1% rise in the second quarter of the year.
The report also shows that none of the 20 arrondissements in Paris have prices at less than €5,000 per meter. In terms of sales Parisian property is back to the average levels the market saw before the economic downturn.
The most expensive place in Paris is the sixth arrondisement where prices are in excess of €10,000 per square meter, a price last seen in 2008. And prices have increased most in Seine Saint Denis, a popular suburb, where they are up 15.2% on the second quarter and up 21.3% on a year ago.
Lefevre said that is shows that the ‘price explosion’ that started in the heart of Paris has now spread outwards.
Estate agents said that there is also an increasing number of Russians, Brazilians and Americans buying in Paris. According to Sébastien de Lafond, president of MeilleursAgents.com prices will not fall as long as taxes remain low. But he warns that a bubble is being created and this could burst when interest rates rise.