Confidence returns to Paris residential market

22 June 2017

• €12,000-18,000psm average prime price

• €20,000-30,000psm average ultra prime price

• 9% of buyers in prime Paris in 2016 were from overseas

• 4.3% total annual residential price growth in 2016 and 7% year to date

Paris is a top-tier world city that offers value on a global stage. The Savills combined world city ranking for connectedness, competitiveness, power and performance places Paris third, after London and New York. But several years of more muted performance have left residential costs significantly lower than its rivals.

However, with a new political regime, historically low interest rates and building consumer confidence, the residential market has now turned. Prices in the prime Paris residential market rose by 4.3% in 2016 and the pace of price growth has picked up in 2017.

“Stock levels have been starting to contract over the last year which will continue to push prices higher in the coming months”, said Hugues de La Morandière, partner of Savills residential in Paris.

Across the whole market, prices stood at €8,430psm in February 2017. Leading indicators from Notaires suggest a price of €8,700psm in June 2017, bringing price growth to 7% for the last 12 months. In the prime market, prices have also grown from a 2014 low, averaging between €12,000 and €18,000psm, while exceptional properties are trading for between €20,000 and €30,000psm.  Values in the 1st, 4th and 5th arrondissements have already exceeded their 2012 peak.

Paul Tostevin, associate director, Savills World Research, said, “This recovery is being driven by domestic demand. Activity has been buoyed by record low interest rates and more-competitive asking prices. This year, the prospect of interest rate rises has encouraged more buyers to close deals and stock levels have fallen.

“Overseas buyers accounted for just 9% of the prime market in 2016, but we expect them to grow in importance.  The new Government will bring clarity on legislation and a period of relative stability. This could encourage buyers who have been waiting on the sidelines to act, including expat French citizens looking to return home.”

Prime Paris is characterised by apartments of the Haussmann era, with limited new development.  Consequently, modern buildings with high levels of services and amenities (a type favoured by wealthy international buyers) are relatively rare in Paris. Pied-á-terres, larger apartments and mansions are favoured by both French and international high net worth individuals (HNWIs). Family apartments are sold mainly to the French.

Overseas buyers accounted for 9% of prime Paris sales in 2016, down from a peak of 14% in 2008. The terror attacks have led some international buyers to postpone purchasing plans. Americans, who benefit from a strong dollar, dropped from 21% of foreign buyers in 2015 to 16% in 2016.

Other Europeans are the largest single foreign buyer group (39%), led by the British, Swiss and Belgians. Buyers from the Middle East and Asia are present in small numbers. The Chinese, a huge tourist group, have yet to make their mark as property buyers.

The perception of France as a high-tax location has weighed on the prime markets. But our analysis of buying, holding and selling costs in major world cities suggests this is unfounded. Property taxes and fees are, in fact, average by global standards. Purchase costs in particular, are lower than many rival cities. Hong Kong, Vancouver and Singapore all levy an additional 15% stamp duty on foreign buyers (on top of existing stamp duties). Beyond property, France’s much quoted 75% income tax rate is not payable by those whose source of income is from another country.

Paul Tostevin continues, “The election of Emmanuel Macron as the new French president should mean a period of stability for the Parisian residential market. Reduced political risk in Europe coupled with pro-business reforms could result in renewed economic growth and stimulate the residential markets.  The abolition of Wealth Tax (ISF) will improve France’s attractiveness to HNWIs, although taxation on real estate at the current ISF thresholds are set continue.”



Key Contacts

Niki Riley

Niki Riley

Press Office

Head Office London

+44 (0) 20 7016 3843


Paul Tostevin

Paul Tostevin

Associate Director
World Research

Head Office London

+44 (0) 20 7016 3883