In 2011 Q1, real estate prices in France are up by 1.5% QoQ for the entire country (existing housing only). Since mid-2009, the French housing market is buoyant. Prices are now above their previous peak (2.6% above 2008 Q2). On an annual basis, prices rise by 8.7%.
Regarding local markets, Paris remained the most dynamic part of France with prices up by 5.6% QoQ for flats, after +5.7% QoQ in 2010 Q4. The very sharp upward trend over the mast quarter propelled the prices to +20.8% YoY. Areas close to Paris are also up, but at a more reasonable pace (+12.2% YoY for flats). Excluding the Paris region, prices stagnate in the beginning of 2011, notably for second-hand houses.
Economic Impacts
If we exclude the Paris (crazy) region, the French housing market is showing the first signs of stabilization. There are a lot of discussions, including among French public bodies, about the existence of a bubble. Valorisation for housing (Price-to-Income or Price-to-Rent) is reaching new historical highs, the affordability is down and household’s debt is growing rapidly (Debt-to-Income now close to 80% of GDI against 60% in the end of 2004).
We think that the trigger for a correction on prices would be the evolution of French 10Y yield (currently close to 3.5%). If it goes above 4%, the party will be over.
Regarding local markets, Paris remained the most dynamic part of France with prices up by 5.6% QoQ for flats, after +5.7% QoQ in 2010 Q4. The very sharp upward trend over the mast quarter propelled the prices to +20.8% YoY. Areas close to Paris are also up, but at a more reasonable pace (+12.2% YoY for flats). Excluding the Paris region, prices stagnate in the beginning of 2011, notably for second-hand houses.
Economic Impacts
If we exclude the Paris (crazy) region, the French housing market is showing the first signs of stabilization. There are a lot of discussions, including among French public bodies, about the existence of a bubble. Valorisation for housing (Price-to-Income or Price-to-Rent) is reaching new historical highs, the affordability is down and household’s debt is growing rapidly (Debt-to-Income now close to 80% of GDI against 60% in the end of 2004).
We think that the trigger for a correction on prices would be the evolution of French 10Y yield (currently close to 3.5%). If it goes above 4%, the party will be over.
World GDP
