The French residential market proved resilient in the years immediately following the global financial crisis. Relatively modest price falls of 9.7% were seen between 2008 and 2009. A period of recovery quickly followed, and by 2011 prices and transaction levels had exceeded their 2007 highs.
This recovery proved short lived, and the last three years has seen suppressed transaction volumes and sliding prices, set against a faltering Eurozone economy and rising national unemployment. As of March 2015, prices in France were 8.4% down on their Q3 2011 high, while transactions stood 15.7% down over the same period.
Record-low mortgage rates have improved market liquidity, and it is low interest rates that will keep any further falls modest in 2015. Challenges lie ahead in consolidating public finances, improving competitiveness and reducing unemployment. Weak economic growth is forecast, which will bear down on the city’s real estate markets although a change of rhetoric in President Hollande’s policies toward the wealthy has helped the prime markets.
Well located, well appointed property is selling best in the capital and elsewhere and the market is likely to remain quality-sensitive while broader economic issues persist.