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People worldwide are experiencing economic jitters as the financial markets go from one extreme to another. Many French are baffled by what’s taking place across the Atlantic. Economic stimulus packages? Tax cuts? Accusations of being a Socialist, Marxist and so much more. Not that French politicians haven’t made more than their fair share of dumb allegations during the election season. But in France, it’s short and candidates aren’t known to be venomous.
To compound matters, so many Americans are singing the sub-prime blues and families are being evicted from their homes, which is an enigma to the French. It’s an entirely different story for people who own Paris real estate. One reason is the French tend to stay put. There isn’t the same attitude that possesses many Americans who buy property, renovate it, and then trade up in order to keep up with the Joneses—who, anyway, long ago said “The hell with it” and moved to an Ashram in Chile.
This isn’t dismissing the nouveaux riches who’ve made it big and want to show it off. But even if they have, the French tend to be lower key. Family apartments in the 16th or 17th Arrondissements may be 300 square meters (about 3200 square feet), but not exactly MacMansions. Even so, house and apartment prices in Paris are at least holding their own and, in many cases, increasing, if admittedly at a slower rate than in previous years.
During a recent press conference sponsored by the Notaires de Paris, (the equivalent of U.S. real estate settlement firms) the association reported that house prices have continued upwards. The official average price per square meter for unoccupied apartments in Paris rose by 2.7% between the 3rd and 4th quarter of 2007 contrasted to 10.5% in the 4th quarter of 2006. Yes, it’s a slow-down, but the market is far from crashing and increases vary from one quartier to another.
The average price per square meter in “Paris Intramuros” ( the city proper) was 6,360€ ($10,145) during the 4th quarter 2007; 36,807 properties were sold in 2007.
Paris real estate is one of a kind. During the past 10 years, the Saint Germain-des- Prés and the Luxembourg Garden areas have increased in value by an impressive 172%.
In 2007, the most expensive arrondissement was the 6th. The average cost per square meter was 9,790€ ($15,616.70). Following that area was the 7th arrondissement that is located on the Left bank and stretches between the Musée d’Orsay and the Eiffel Tower area. Notaires registered an increase in prices of 12.9% per annum. The average price was € 9,260 ($14,771.3) per square meter.
But, investors beware. Don’t buy bricks and mortar if you need to rent it in order to cover your monthly payments. And unless your income is in euros, don’t assume you won’t be hit by currency fluctuations. In the past eight months, there’s been a decrease of the euro against the dollar of more than 20% percent.
Paris cannot spread out because its borders are finally, and permanently fixed. Height limitations and the complete absence of unused land prohibit adding much, if anything at all, to the housing stock. Tear-downs are unknown—and would be unwelcome. If you’re a pioneer, the least expensive arrondissement is the 19th where the average square meter cost 5,050€ ($8055) followed by the adjoining 20th that costs €,3405 or $8518
But even the Paris region is showing signs of softening since January 2008. The Paris Notaries’s Chamber reported in an Internet statement that in the Paris region the prices for houses outside of Paris’s city limits decreased by 1.3% between November 2007 and January 2008. However, prices for apartments rose by 1.6% in the same period. It’s not much but it’s far preferable to seeing foreclosure signs.
My conclusion? For what it’s worth, you better be confident—and have a lot of sure money in the bank—to buy in Paris now. Test the waters and rent, even lavishly. It’s cheaper than buying and you don’t have a long-term obligation. And you won’t turn blue holding your breath, hoping that mortgage rates go down, rentals will pay your costs, and your ship will come in. The Seine is not navigable by anything bigger than a barge in Paris.
© Paris New Media, LLC
Historic House of Paris: Residences of the Ambassadors (Nov. 2010, hardcover)