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Demand outpaces supply in Paris housing market

By Sarah Elzas

Housing remains an ongoing issue in France. The French government recently announced plans to double the amount of student housing in the next few years, to reach 700,000 housing units.

In the Paris area, advocates and even the Mayor say there are not enough apartments for everyone, not just students, and they want the government to pitch in. Real estate agents have their eye on the Grand Paris urban renewal project.

When you talk to real estate agents about the housing market in France, you hear about Paris, and then about the rest of France.

“In Paris, prices are up all year, and in France, the market is very bad,” explains Dan Halimi, a real estate agent with Nexity. “Paris is a micro market, and we don’t have the same clients or the same budget.”

Gilles Ricour de Bourgies, President of the FNAIM, a grouping of 1,800 independent real estate agents in the Paris area, says there are just not enough flats or houses to satisfy the needs of clients.

And it is not just a lack of things to buy, but also places to rent. He says the FNAIM has been working with the government on ways of providing financial incentives to owners to rent out their flats.

“Because the State does not have enough property to satisfy the demand,” he says.

The Socialist mayor of Paris, Bertrand Delanoë, has been pushing for more investment in public housing, and he has also come up with other solutions to solve the housing crisis.

One is a proposal to limit the number of short-term rentals in Paris, which he says benefits tourists, not residents.

Fabrice Petit, an agent with Lodgis, an agency specializing in short-term rentals for foreigners, disagrees. He says there is a real need for short term housing in the French capital, even for French interns or temporary workers.

“If you make short-term rentals illegal, it's hard to imagine where they would stay,” he says.

But despite the limited market and high prices, first-time buyers are still interested, as interest rates are relatively low. And it’s not just French buyers.

Ricour de Bourgies says that British and Russian buyers, who left the market in 2008 during the financial crisis, have come back to over the last six months. And there are new investors now, too: from India, China and Brazil.

“They buy very large flats in historical parts of Paris, with very specific views,” he says.

He says 20 per cent of the Paris housing is bought by foreigners. Though they tend to be attracted to more expensive apartments, he dismisses any talk of a housing bubble. Speculators, he says, have left as prices reached their peak.

“For people who want to make money with the housing market, they have gone to areas affected by the Grand Paris project,” he explains.

The Grand Paris or Greater Paris is a 35-billion-euro urban renewal project conceived of by President Nicolas Sarkozy. The idea is to link up regions around the capital with high-speed transit lines, and renew the housing stock

Ricour de Bourgies says it will benefit not just high-end buyers, but also low income renters: some 700,000 housing units are to be built over the next ten years, he says, by a mix of public and private developers.

“There is not enough construction in Paris, and this project of President Sarkozy’s, the Grand Paris, it's the solution,” he says.

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