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[Exclusive]: Where will the Paris property market go after the epidemic? Let's take a look at the ups and downs of housing history!

​Red Line Intelligence Group

​In everyone's impression, the Paris property market has always been "steady and progressing", without the "stimulus" of huge profits and domestic investment, but it is a "hard currency" like gold with preservation of value, earthquake resistance and strong liquidity. A good house can be passed down from generation to generation, it is a symbol of taste and safe and stable. Coupled with the proud cultural heritage of Paris, its romantic temperament and the self-confidence of "je ne sais quoi", I have never been jealous of London and New York's far leading "Chinese people's gold power", only to attract high-quality and high-volume "The Rich Man with Feelings". Who would have thought that the real estate market in Paris has also experienced various stimulus stages of bubbles, crashes, and skyrockets?


1960-2020 Paris house price trend


2020 Paris zoning house prices


​Paris landmark map

Since the new crown epidemic last year, one of the topics that everyone is most concerned about is the rise, fall, and volume of the housing market: landlords are afraid of falling, want to buy and hope to fall, and watch the fun and sing about falling (human nature naturally prefers crisis psychology), real estate agents will Afraid of "deadlock", there will be no transaction volume. As an author who has been "working hard" in the industry for nearly 20 years, and the founder of French Red Line Capital Real Estate, today I will take history as a mirror and share with you the ups and downs of Paris real estate in the past 30 years, which is more exciting than you think!


A Paris property bubble in 2021?

01/ The most tragic seven years: 1990-1997

The vicious investment and the influx of global capital in the 1980s led to the skyrocketing real estate market in Paris: house prices tripled in just four years from 1986 to 1990, and at the end of 1990 it was close to 5,000 euros per square meter! But this huge bubble burst, the real estate market collapsed, and the Paris real estate market entered its darkest 7 years.


 Paris housing market falls for 7 years

At the same time, banks generally raised loan interest rates (6-7%, even as high as 9% in 1996) and account management fees (agios), and the extremely heavy loan costs made the housing market even worse: house prices increased rapidly from a high of nearly 5,000€/m² in 1990. It fell to 2850€/m² in 1997, a staggering 42% drop, of which house prices fell by nearly 20% in one year in 1992. What is even more frightening is that with the plummeting housing prices, the transaction volume of the Paris real estate market has also dropped from an average of more than 40,000 units in 1990 to less than 25,000 units in 1991, and the market is screaming.

In terms of commercial real estate, the bursting of Japan's bubble economy at the other end of the same period shook the world. As the most important overseas investors in the Paris real estate market that year, a large number of Japanese sold overseas assets desperately to repay domestic loans, which further hoarded the number of houses in the Paris market, and the once hard-to-find little Paris became shouting everywhere. Offices in prime locations, which used to be hot in the past, are also not immune to bad luck, and only sharp price cuts in order to get rid of them. At this time, the house is difficult to sell or rent. In order to reduce the pressure of loan repayment and the high holding costs of property fees/taxes, many landlords offer zero rent and only pay the property fee to move in, but tenants are hard to find.

​ The real estate tycoon broke his wrist, and the once high-spirited young developer jumped from the building in despair. . .


No one cares about the real estate market

02/ The most exciting 2 years: 2009-2011 house price 🚀35%

​Affected by the world financial crisis in 2008, the house price in Paris ushered in the first decline since 10 years of rising in 1998. The decline reached 9% in the third quarter, but it rose rapidly in 2009, and the second quarter has rebounded to before the crisis. (mid 2008) level, and then there was a real explosive growth in Paris house prices: 2009-2011, an explosive 35% increase in just two years, of which only in 2011, the house price in the Greater Paris area rose as high as 22%! Why is the housing market rebounding so quickly? The key point lies in the invisible hand of the government!


Paris house prices explode

In order to protect the French economy, which was hit by the financial crisis, the French government injected 15 billion euros into the six major banks in 2009, and the central bank lowered interest rates accordingly to stimulate the economy; commercial banks eased real estate loan conditions and interest rates. The ease and cheapness of financing directly stimulated the real estate market, supporting the rise in prices.

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Paris property market in high spirits

The time from bottoming out at the end of 2008 to the rebound in early 2009 was very short, making it difficult to achieve bottom-hunting. The real bargain-hunting that can actually be done is in the next 2 years.

03/ Two years of bargain hunting: 2012-2014 market weakness cash is king

After the explosive rebound from 2009 to 2011, the Paris property market entered a period of weakness in 2012: the market turnover in the same year also fell by 12% compared with 2011. The reason for this period of weakness is also regulation: the global credit crisis in 2008 broke out, and countries around the world began to further strengthen the supervision of financial markets and began to implement deleveraging policies in the face of the crisis. According to the new Basel Accord (Bâle I/II), the French government strengthened the control measures on banks after the emergency bailout in 2009. Banks are also more cautious about real estate loans and tightened the money: even if the loan interest rate continues to fall, those who can get loans Harsh conditions. Total bank property loans fell from 161.6 billion in 2011 to 120.5 billion in 2012. At this time, investors with strong cash or good loan qualifications can comfortably "buy the bottom".


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Weak house prices in 2012-2014

04/ Two years of bargain hunting: 2012-2014 market weakness cash is king

From 2015 to 2020, the Paris real estate market has once again entered the growth zone, with house prices rising by 35% in five years, from 7960€/m² at the end of 2014 to 10300€/m² in early 2020. In February 2020, the real estate in Greater Paris, which has not yet been affected by the epidemic, maintained a high momentum. The Paris Region Notary Office predicted that the Paris real estate market would usher in a 7% growth this year. Although the average price finally stabilized at 10,790 euros per square meter in December due to the impact of the epidemic, high-quality properties also performed well under the epidemic: high-quality properties in small Paris can be sold within 72 hours as soon as they enter the market. . In Paris 2020, a property valued between 3 and 35 million euros is still sold every three days in 2020, after two "lockdowns" (March and November): an average of nearly 5 million euros, basically the same as in 2019; the average price per square is 18,667 euros, an increase of 9.2% compared to 2019!


​Paris will always be Paris Always Paris

How about other properties? What will happen to the Paris housing market in 2021? How will the influx of institutional investors into the residential market affect individual buyers? Will the government bail out the city? And listen to the next decomposition.

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