MARKET UPDATE
Hello and welcome to the Laroche Groupe Paris Properties Market Update for the 1st quarter of 2025, based on the report released on May 27th by the Paris Notaires.
What you need to know:
- Paris has hit the bottom of the trough on pricing and is seeing upward pressure of +2.7%
- 25% increase in number of sales compared to Q1 2024
- Interest rates down significantly to just over 3%
PRICING
The average price per square meter in Paris has bounced around the 9,500 € mark for the past year, having descended through the symbolic 10,000 € mark during the summer of 2023. Based on data taken from the signed pre-contracts that are recorded for sales that will close in July and August of this year, prices are for the first time since 2020 forecast to rise in Paris and by +2.7% to 9,750 € per square meter.
Not all arrondissements experience the market in the same way and are, in fact, their own micro-markets. We see in the heat map above that the arrondissements of Paris Centre (1-4) and the 7th experienced the greatest year-over-year price drops in Q1, followed by the 5th, 6th, 10th, 15th 18th and 19th, with 6 arrondissements remaining flat and the 8th, 9th and 16th experiencing positive price growth. We are seeing the market pivot in real-time.
The most expensive arrondissements continue to be the 6th and the 7th, followed by the 8th, Paris Centre, the 5th and then the 16th, all above 10,000 € per square meter.
NUMBER OF SALES
The number of sales closed rebounded by a substantial 25% compared to the 1st quarter of 2024. While this is certainly great news and indicates that the combination of lower interest rates and lower prices have finally created the conditions attractive enough to bring both buyers and sellers back into the market, it is important to note that both the number of 27,370 closed sales (rolling 12 months) and 7,500 closed sales (1st quarter) measured in Q1 2025 are at at parity with Q1 of 2023, very near the numbers seen after the 2008 financial crisis. There is a lot of room to grow.
INTEREST RATES
Interest rates have fallen steadily since hitting their peak of 4.5% in November of 2023. 7 rate adjustments downward by the European Central Bank in the past 24 months have lowered the borrowing rate to just above 3%, 150 basis points.
CONCLUSION
We are at a point of inflection that is historic, in that the post-Covid inflationary pressures have been brought under control, lending rates have been brought back down to historically low levels and the market can now enjoy a period of sustained growth as sellers come back into the market and pent-up buyer demand can be satisfied.
In other words… we are at the bottom, buy now.
Salut,
Aaron
