Paris property prices enjoyed double-digit increases last year as opposed to the rest of France where prices remained more or less static. In the Paris metropolitan area prices rose by an average of 12% which compares very favourably with a rise of just 0.6% throughout the rest of France, and there is little doubt that continuing low interest rates helped to fuel this rise with rates at their lowest levels since World War II.
The housing boom in France lasted 10 years from 1997 to 2007 with the price increases peaking in 2004. When the economic downturn began to bite prices decreased by nearly 12% in 2008, but apartment prices in Paris had risen 115% during the boom meaning some investors still enjoyed excellent capital growth returns. The rent index which rose by just 29% during this period. Although initial rents can be set freely they can only be revised once a year and there are strict limits as to how much they can be increased by due to the INSEE rental index.
This means that the rental market within France is constrained as there have been certain periods where the allowed rent increase has been below the rate of inflation. In addition there is quite a large social housing sector which holds about 17% of the housing stock, while 21% is held by the private rental market. However the number of people who choose to rent a home rather than buy is much higher in France than in the UK, and rental property in Paris will always be in demand due to the high numbers of people who choose to move there for work.
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