After prioritizing rental investments or second homes, Parisian buyers are now refocusing on acquiring a primary residence.
In recent months, transactions in the Parisian resale market have rebounded. Between February and April, they increased by 18% (the same year-on-year increase), reaching 6,300 sales, according to notaries in the Île-de-France region. Similarly, since January 1, 2013, loan applications for property purchases with a signed preliminary sales agreement have increased by 22% compared to the same period in 2012 (versus an average increase of 3% in France), according to the broker Meilleurtaux.com.

These figures should nevertheless be taken with caution because "activity contracted significantly after the peak in sales in January 2012 due to the tightening of capital gains tax on real estate which came into effect on February 1, 2012", the notaries indicate.

Prices are stagnating and mortgage interest rates are falling

Alongside this relative upsurge in transactions, prices are stagnating in the capital, which, coupled with historically low interest rates, "is giving potential buyers a bit more purchasing power in the real estate market," according to meilleurtaux.com. Indeed, "in Paris, contrary to popular belief, purchasing power has been increasing for the past two years. Paradoxically, it is during more difficult periods, such as those we are currently experiencing or those of 2008-2009, that purchasing power grows and good buying opportunities can arise," explains Hervé Hatt, president of meilleurtaux.com.

Nearly 80% of Parisians buy property to live in

As a result, Parisians with incomes high enough to afford it – the average price per square meter in Paris is still a hefty €8,280 – are buying again… but more for their own homes than before. Sandrine Allonier, head of economic research at meilleurtaux.com, notes that in 2013, “there was a refocusing on buying a primary residence for 78.5% of Parisians (compared to 71% in 2012) rather than a second home or a rental investment , which has less favorable tax treatment than it used to.” This trend suits banks very well, as they prefer to finance primary residences to build closer business relationships.

The share of purchases made in Paris is growing 

This shift in Parisian property purchases towards primary residences is mechanically increasing the proportion of buyers purchasing in Paris. Thus, "in the first half of 2013, the proportion of Parisians buying in Paris increased significantly, rising from 48% to 51%," notes Sandrine Allonier. However, "36% still buy elsewhere in the Île-de-France region (up 2 percentage points year-on-year), while acquisitions in other regions are declining. Only 13% of Parisians are making this choice (down 5.5 percentage points)," she adds.

 

Source: latribune.fr