Tags

, , , , , , , , , , , , , , , ,

L1010019

According to the leading website “meilleursagents.com” the Paris property market has experienced a slight recovery in the Q4 2014, although the whole 2014 is still showing a price decrease.
Overall the property price decreased by 2.8% during 2014, but downward trend was slightly reversed at the end of the year as the prices were up by 0.3% in Q4. The price slide was therefore lower than expected as most forecasts were around 3 to 5% decrease in 2014. The main reasons is the continuous decrease of the mortgage rate, from 3.5% in early 2014 to 2.6% at the end of the year (for a 20 years mortgage), while most forecast were anticipating a slight uptick in mortgage interest rate at the end of last year. The decrease in mortgage rate is equivalent to a 7% drop of the property price, a significant win for the property buyers.
The slight Parisian recovery in Q4 2014 seems to benefit mainly to smaller flat, with a 1.1% upteak.
According to “meilleursagents.com”, average price in Paris stands at € 7 863 / m2 at the end of 2014, i.e. € 700 /m2 lower than at the peak of the market in June 2011.
Long term drivers of the property market have not significantly changed, Euro zone economy is not improving, French unemployment is still raising, while the ECB should pursue its low-interest rate policy. On the property market, property investors might still shy away from the market due to low return and tax uncertainties. However, the price uptick on small flat in Q4 2014, might be a sign that the first time buyers going back to the market, but it is too early to say. However, “meilleursagents.com” considers that the property market is likely to continue on its slow sliding slope in 2015. The main reasons are the unchanged economic environment and the current lack of buyers, there is at the moment barely one buyer for one property seller in Paris. Their forecast for 2015: a moderate decrease by 3%. Overall the French property market is also likely to follow a slow downward trend in 2015.

The website continues its diagnostic by disclosing a slightly lower price decrease in Lyon (-2.1% in 2014) and higher in Marseille (-3.8%), while the organisation discloses 3 criteria to benchmark the healthiness of the property market in 10 French major cities. A healthy market is defined as well-balanced between the buyers and the sellers

  • Market fluidity: time length for a property seller to sell its property
    • green: Paris is the best with the lowest time length: 58 days
    • red: The town in the South East are the worst performer: Montpellier 99 days, Marseille 129 days, Nice 120 days
    • amber: Bordeaux (67 days), Lille (75 days), Strasbourg (80), Nantes (82), Toulouse (87), Lyon,  (88)
  • Balance between buyers and sellers: “meilleursagents.com” considers that a “balanced” property market requires at least 2 or 3 buyers for one seller, as it takes 2 a 3 longer for a buyer to buy a property than for a seller to sell one. In all 10 main French cities, the ratio of buyers/seller is far too low:amber:
    • amber: Paris, Strasbourg, Nantes, Bordeaux with 1 buyer for 1 seller; Toulouse and Lyon with 1.1 buyer for one seller.
    • red: Marseille with 0.6 buyer for 1 seller, Lille and Nice with 0.7 buyer for one seller, Montpellier with 0.8 buyer for one seller.
  • access to the market: a healthy market is an accessible market, when a majority local inhabitants can acquire a home in relation to its requirement (e.g.: home size in relation to the family size…)

    • green (>50%): Strasbourg 51%, Nantes 54%, Marseille 56 % of the cities inhabitants can afford to buy home according to their family needs.
    • amber: Nice 31%, Lille 40%, Bordeaux 43%, Montpellier 45%, Lyon 46%, Toulouse 48%
    • red: Paris 20%

 When combining the 3 factors of accessibility, fluidity, and balance offer / demand, Nantes  ranks the first, followed by Strasbourg, Lyon, Toulouse, Bordeaux, Paris, Lille, Marseille, Montpellier, Nice. However, looking at the best market for the buyers, Marseille would probably be the city with the best opportunities…