While the Notaries of Greater Paris announce a stabilization of prices in Paris, the Capital remains difficult to afford for many borrowers. After reaching € 10,850 / m2 last fall, then € 10,730 in January, the average price of apartments in Paris is estimated at € 10,630 per m2 over the period from March to May 2021 (pre-contracts). But even at this slightly declining price, you have to earn at least nearly 11,500 € net per month to buy 75 m2!
In 10 years, average prices in Paris have increased by € 5,500 / m2, a surge that has not been offset by the drop in rates, which have been divided by 3, thus leading to an increase in the income needed to buy in Paris. In the rest of Ile-de-France, real estate purchasing power varies greatly from one department to another, with a minimum income to buy 75m2 ranging from € 3,000 / month to € 7,000 / month.
A slight drop in prices in Paris which still remain at record levels!
The symbolic € 10,000 mark was crossed in August 2019, but that of € 11,000 will probably not be this year. Les Notaires du Grand Paris has indeed noted a lowering of prices: after peaking at € 10,850 per m² in October and November 2020, the price per m² in Paris stood at € 10,730 in January 2021 before stabilizing currently at around € 10,630 according to projections on pre-contracts, ie a return to its level of a year ago.
However over 10 years, the price increase in Paris is 42% in total and even 77% compared to the low point of 2009, when the average price had fallen to € 6,020 / m2. At that time, lending rates were over 4% over 20 years. Since then, even if they have been divided by 3, the surge in prices in Paris is no longer offset by the fall in rates, and the purchasing power of real estate has continued to decrease since 2016, passing for 1000 € of monthly payment. over 20 years, from 23.7 m2 to 19.8 m2 currently In terms of real estate purchasing power, between 2012 and 2017 the rise in prices in Paris was offset by the level of interest rates. But this is no longer the case since prices crossed the symbolic threshold of € 9,000 per m2 in early 2018. At more than 10,500 €, we can no longer even buy 20 m2 with rates at 1.35%, compared to more than 22m2 10 years ago, with rates yet at 4%, but prices 40% lower.
It is now necessary to earn nearly 11,500 € net / month to buy 75 m2 in Paris
With such a surge in prices over the past decade, and despite a calming down this year, the Parisian market has for several years been decorrelated from income, the evolution of which does not follow that of prices! Inevitably, the income needed to buy in Paris has stopped increasing since 2016 : currently to buy an apartment of 50 m2 in Paris, financed by a loan over 20 years (with 10% contribution), it is necessary to earn at least 7,660 € net per month. To buy 75 m2 to house a family with 2 children, you will need to borrow on average € 797,250 and earn a minimum of € 11,492 net per month (monthly payments of € 3,792 excluding insurance over 20 years)
Those who buy in Paris have a very different profile from the average profile of borrowers
Among borrowers financed by Vousfinancer, we note that first-time buyers only represent 20% of buyers in Paris (compared to 40% on average in France). Overall, all profiles combined, they borrow on average € 295,000 in Paris (i.e. € 100,000 more than the average for France) with average income of € 82,000 and a high contribution (€ 70,000) in order to buy a surface large enough to live there.
In the current context marked by the various confinements and the possibility of working more remotely, we note an evolution in the profiles of buyers in Paris with a fall on the part of certain types of buyers such as first-time buyers or families who prefer to move away to other departments of Ile-de-France or even leave the region to buy a larger area with an exterior. The share of first-time buyers in Paris thus fell to only 20% of buyers in 2020, against 28% in 2019 and 40% in 2018.
Conversely, the share of investors is increasing in Paris: it is twice higher than it is at the national level (30% against 15% on the national average), in particular because of the safe haven that the Stone still constitutes for the French, after a year 2020 marked by volatility, in particular in the stock markets, but also the level of interest rates which leads some inhabitants of large cities, who cannot buy a surface. sufficient in which to live, to make the choice to remain tenants of their principal residence and to buy anyway in order to rent.
Large differences in purchasing power and income necessary to buy in Ile-de-France
If the prices in Paris know a certain calm, in Ile-de-France, according to the Notaries, under the effect of the increase in demand, the progression continues: + 5.8% in January 2021 compared to January 2020. However, at 6,640 € / m2 on average in March according to projections on pre-contracts, prices remain much more attractive than in Paris, with large differences depending on the department..
So for a monthly payment of € 1,000 over 20 years, you can buy 12 m2 more in Ile-de-France than in Paris (31.7 m2 against 19.8 m2) or one more room … or even more, depending on whether you buy in large crowns or in small ones: you can thus buy 76 m2 on average in Seine-et-Marne but only 32.4 m2 in Hauts-de-Seine, nearly 2.5 times less surface area!
On the income side, there are also big differences: to buy 75 m2 in Hauts-de-Seine, you have to earn € 7,000 per month against € 4,300 in Seine-Saint-Denis but more in Yvelines (€ 4,411). In any case, we are far from the € 11,500 / month needed to buy in Paris …