Few Parisian districts are still showing year-on-year price increases. This downward trend could continue in the coming months.

There is no longer any doubt. While Parisian property prices haven't plummeted as rapidly as in most provincial cities, the downward trend is undeniable in the capital. In the second quarter, prices for existing apartments fell by 1.9% year-on-year to an average of €8,200 per square meter, according to Parisian notaries. And based on signed preliminary sales agreements, the average price could drop even further to €8,160 by next October, warn professionals.

As a sign that the lull is real, only 4 districts still show price increases compared to last year:

+3.2% in the 4th arrondissement to €11,590 per square meter;
+2.9% in the 19th arrondissement to €6,670 per square meter;
+1.6% in the 2nd arrondissement to €9,590
per square meter; +1.3% in the 12th arrondissement to €7,920 per square meter

However, everywhere else the stone is crumbling. Prices are therefore falling by:

– 8.8% in the 6th arrondissement at €12,000 per square meter
– 7.7% in the 1st arrondissement at €9,930 per square meter
– 5.5% in the 5th arrondissement at €10,080 per square meter
– 4.6% in the 7th arrondissement at €11,770 per square meter
– 3.6% in the 8th arrondissement at €10,000 per square meter
– 2.9% in the 16th arrondissement at €9,320 per square meter
– 2.6% in the 17th arrondissement at €8,360 per square meter
– 2% in the 9th arrondissement at €8,600 per square meter
– 1.6% in the 15th arrondissement at €8,630 per square meter
– 1.5% in the 11th arrondissement at €8,210 per square meter
– 1.3% in the 13th arrondissement at €7,750 euros per square meter
– 0.8% in the 20th arrondissement at €6,870 per square meter
– 0.8% in the 10th arrondissement at €7,650 per square meter
– 0.7% in the 18th arrondissement at €7,310 per square meter
– 0.5% in the 14th arrondissement at €8,520 per square meter
0% excluding the 3rd arrondissement at €10,080 per square meter

Such declines were predictable, given how strained relations between buyers and sellers have become over the months. The former are negotiating increasingly hard, while the latter are digging in their heels… until they are forced to make some concessions. One telling statistic sheds light on this impasse: since the boom years before 2007, transactions involving existing homes have plummeted by more than 30% in the capital.

This slowdown is also very real in the rest of the Île-de-France region, where notaries are reporting an average drop in sales of at least 20% compared to the same period before the crisis. In many of the region's major cities – including Versailles, Vincennes, and Saint-Germain-en-Laye – negotiations are now turning in favor of buyers.

Could the price decline accelerate next year? This scenario cannot be entirely ruled out. In addition to the capital gains tax relief (in effect since September 1st), homeowners will be able to benefit from an additional 25% allowance until the end of August 2014… which could encourage a number of them to sell as quickly as possible. Another factor that could reinforce the price drop: buyers risk seeing their purchasing power eroded by potential increases in mortgage interest rates.

Source: Capital