Real estate market trends in France

After a booming past few years, 2007 was stable. Price variations were fairly insignificant:

• +0.89% for apartments
• +0.90% for houses

Real estate sales in 2007:

• 324 600 new homes
• 609 400 older homes

The real estate market for older homes

After years of extravagant increases (+140% in 10 years), this market seems to have reached its limit. 2007 saw a sudden slowdown with an increase of only 3.8% (down from 15.4% in 2004, 10.4% in 2005, 7.1% in 2006).
Analysts are expecting a stabilisation somewhere between 0 and 2% for 2008.

The real estate market for new homes

Here too, the market is showing negative signs. In Ile-de-France for example, sales dropped by 6% in one year. Experts however remain confident for this sector where over the last few years prices rose at a slower pace than older homes (+68% in 8 years).

Home ownership

We observe a reduction in purchased surface area due to high real estate prices. Households devote more and more years of income to buy their home: 4.8 years on average in 2007 versus 3.8 years in 2003, 3.2 years in 2000.

Commercial real estate

The sector is healthy and seems to be resisting the financial crisis. The volume of investments on the real estate market for office space experienced a record increase of 17% in 2007. Nonetheless, the market was on a downward trend during the 4th quarter of 2007 due to the American subprime crisis.

What’s in store for 2008?

A rise in prices is fairly improbable in the current context: real estate crisis in the United States and in Spain, low purchasing power of the French, increased interest rates on loans.