Average prices in Paris have stabilized since May 2022 at around €10,200/m² on average, whereas a year earlier they had crossed the €11,000/m² mark. There is a wait-and-see attitude on the part of some buyers who hope to see a drop in prices.
Credit rates have been rising for a few months, the Banque de France has even indicated that they could reach 3% by the end of 2022, a significant increase which will have an impact on the possibility of borrowing for certain buyers. potential, this simply crowds out a number of buyers from the market, and makes the purchase more constraining for others. On the other hand, we see a surge in demand due to lower prices in some cities.
The end of the pandemic promises a return of international buyers, which should help maintain demand as well as price stability (in Paris international buyers represent 8-10% of transactions in normal times, this number has dropped to 2% during the pandemic). American buyers, for example, are back in Paris, and benefit from the EUR / USD exchange rate in their favor if they wish to invest in real estate in Europe, this seems to accelerate the projects of those who have decided to invest in France in particular. With the restrictions linked to the Covid being lifted, there is a clear return of international buyers and sellers.
Some titles (such as Le Parisien) suggest that prices could fall below the symbolic bar of €10,000/m² crossed in September 2019. The European Central Bank estimates that there is a premium in real estate prices of 10% to 60% depending on countries and cities in Europe. In the United States, there is talk of a correction in real estate prices of up to 50% in places and of an "imminent bursting of the bubble", managers of Hedge Funds on Wall Street such as Ray Dalio are talking of a possible crisis comparable to 2008 or even 1929. (Direct links: https://youtu.be/XhEAtRVhqBA and https://www.cnbc.com/2022/06/17/dalio-is-right-to-short-europe-strategist-says -the-pain-will-go-on.html )
Historically, real estate prices always take some time to react to crises and are influenced by a large number of economic, sociological and psychological factors that influence the behavior of the various market players.
Prices are stagnating and falling in Paris and in the big cities, while in the rest of the territory they continue to rise. Inflation, the war in Europe as well as the rise in interest rates after the very loose monetary policy during the pandemic have a mechanical effect on the real estate markets, these effects have been felt for a few months (fewer buyers on the market, stricter borrowing conditions, larger contributions requested by banks and above all the price of borrowing which has become higher due to the increase in interest rates).
Only 35% of French people think it's a good time to buy, a year ago they were 70% according to an IFOP/FANIM survey. It seems very difficult to anticipate the future development of the market in these rapidly changing conditions, the outlook is uncertain. The rise in prices sustained during the pandemic by monetary policies with very low rates seems to have reached a mechanical limit, the increase in rates has cooled the real estate markets and in some cases the evolution of prices which sometimes even fell as bets on the last 12 months.
