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2008-2020, London|New York|Paris Ultimate Stress Competition

​Red Line Intelligence Group

After taking a look at the 30-year history of the real estate market in Paris in the last episode, today we will let London, New York and Paris PK together to see how they perform in various crises.

Everyone imagines that the Paris property market is like a soothing piano piece, while the New York and London property market is a fierce metal music, is it really true?

Stand firm and sit tight, the "race" starts now!

01/ Paris VS Rival London

​Paris and London have always been at war with each other, and the crown, which is the most popular city for international investors, has also changed hands frequently in recent years. So how did the London property market behave in the face of the financial crisis, Brexit and the new crown epidemic?


  • 2008: The financial center's job is not good


In October 2007, the average price of apartments in London rose to nearly 300,000 pounds per unit, but the financial and subprime mortgage turmoil that followed brought the property market to the bottom of the sea. end. Although the British government started throwing 50 billion pounds to the banks to rescue the market in October 2008, the London property market did not catch its breath until June 2010, and the housing prices in the central area returned to the level of 2007 before the financial crisis, which took nearly 3 years before and after. However, house prices in Paris began to fall in the third quarter of 2008, bottomed out in the second quarter of 2009, and quickly rebounded to pre-crisis levels in the first quarter of 2010 in just 6 months. In contrast, the London housing market has experienced a large decline over a long period of time, which is closely related to the large proportion of the financial industry in the urban economy. It seems that there are advantages and disadvantages to being a financial center.




  • 2016: Brexit to blame for falling house prices? no


In 2016, the United Kingdom voted to leave the European Union. In the same year, London house prices fell for the first time after many years of rising. But are house prices falling because of Brexit?

Beginning in April 2016, the British government imposed an additional 3% stamp duty (transfer tax) on rental properties or non-first-home transactions, which increased the cost of house purchases for some investors, especially overseas buyers. 41% of transactions in the London market are from overseas investors, and their absence has greatly affected the performance of the London property market, with a decline far exceeding the UK average. "As shown in the chart of house price changes in London and the United Kingdom (the yellow line is London and the blue line is the whole of the United Kingdom)"

Brexit has not substantially affected the London property market, with house prices still rising by 11% from 2016 to 2020, while Paris house prices rose by as much as 21% during the same period.


  • Will the 2020 epidemic stimulate the housing market? really?


The average London apartment price exceeded £500,000 for the first time in November 2020, an annual increase of 3.9%, making 2020 the biggest year for house price growth since 2017. The unstoppable rise of the epidemic also depends on tax policy: the British government has launched a limited-time stamp duty reduction and tax increase policy. Buyers who complete the transaction between July 8, 2020 and March 31, 2021, and the transaction amount is less than £400,000, do not need to pay any stamp duty; at the same time, from April 2021, the stamp duty for overseas home buyers will be increased by 2%, For a time, both local buyers and overseas customers are rushing to enter the market in 2020. The British government's stamp duty manipulation can be described as perfect!


In 2020, without any policy stimulus, the real estate market in Greater Paris will “naturally” increase by 6.5% (up 5.4% in Little Paris) after experiencing two lockdowns for a total of three months and five days and being unable to visit the city. Increase in value up to 9%


New York - the world's financial center, where the rich live. So how does the New York real estate market cope with stress in the face of a crisis?

  • 2008: Down! fall! Still down!


We have already seen the impact of the 2008 financial crisis on the property market in Paris and London, and now we have come to New York, the epicenter of the financial and subprime mortgage crisis.

The subprime mortgage crisis started in the real estate industry, and the bubble in the U.S. housing market was blown up by the "easy-to-get" mortgages. In 2008, marked by the collapse of Leman Brothers, the financial crisis broke out in an all-round way, and the U.S. property market bubble completely burst!

On December 30 of the same year, the S&P Home Price Index (Case-Shiller Home Price Index) experienced the largest drop in its history. New York housing prices have fallen for six consecutive years since their peak in July 2006, with a total decline of 27% by mid-2012.

  • 2020: Lockout in New York

621,000 infections, 27,354 deaths

New York real estate market almost shuts down


Unlike Paris and London, the epidemic has seriously affected the New York property market. Not only has the annual transaction volume plummeted by 32%, but the median house price in New York in 2020 will only increase by 1% compared with 19 years (if inflation is included, it is equivalent to negative growth!). In New York's most expensive neighborhood, Hudson Yards, Manhattan's Hudson Yards, transaction activity plummeted 85% for the year, bringing it to a near standstill, and its median home price fell 14.4%.














Final summary:

Whether under the influence of the financial and subprime mortgage crisis, or in the face of the epidemic, the housing prices, growth and rebound of the Paris property market are worthy of the name



This result may be somewhat unexpected. After all, the main feature of the Paris real estate market in everyone’s impression is the stable preservation of value and then the appreciation, but in comparison, the Paris real estate market is not only safe, but also has a very strong ability to appreciate.

According to the 2020 global real estate market analysis released by Knight Frank, the main reasons why the Paris real estate market maintains such a strong momentum:

1. The scarcity and non-renewability of houses in Paris (due to urban planning and urban appearance protection, there is no vacant land for new houses in Little Paris)

2. Stable economic environment

3. Low interest rates on loans

The beauty and romance of Paris are well known to the world, and today we have unearthed the strength that is often overlooked under the beautiful appearance of Paris. In the future, when you choose overseas asset allocation, don't misunderstand that this city is only suitable for enjoying life leisurely, and it is also a smart investment choice.


2006-2018 London house price index (green) and transaction volume (blue) chart


02/ Paris VS rival New York


Image | Douglas Elliman 2020 Market Report

03/ Who will win the championship in Paris, London, New York?

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