Supply and demand in the mainstream market

Data from Meilleurs Agents shows mainstream prices have started to soften across Paris. The question is whether prices will follow transactions and experience more substantial falls.

There are opposing factors at play. Uncertainty over employment and economic conditions may dampen sentiment over the coming year.

The ultra-low interest rate environment, however, makes mortgages affordable to purchasers.

Meilleurs Agents’ ITI score (L'Indicateur de Tension Immobilière) measures the balance between demand and supply in the market.

As of March 2021, the ITI for Paris indicated slightly more demand than there is supply in the market. However, this has come down significantly since the pandemic (see chart, below).

What’s next for the Paris property market?

Prime prices to soften

With international travel restricted in the near term, along with ongoing uncertainty around the shape of economic recovery, we forecast prime prices to soften over 2021; falling between -1.9% to <0%.

This compares to an average forecast growth of 1.6% across our 30-city Prime World Cities index average, but it is on par with a number of other European capitals, including Lisbon, Madrid and Rome.

A long-term store of wealth

Prime property in land-constrained central Paris remains finite and is viewed by many as a safe, long-term store of wealth. Low interest rates make real estate an attractive investment and will help underpin demand.

Paris is growing

Prime Paris is expanding beyond the historic core. Infrastructure investment and the drive for more space will further support growth beyond the city’s limits.

Luxury living is evolving

With greater emphasis on outdoor space, health and environmental credentials, what constitutes luxury living is evolving. The definition of prime property is now expanding to incorporate outer areas too.

_{Read the other articles within Report: Paris – 2021 below}