Prices for new real estate: changes in 100 cities in France

The Real Estate Laboratory presents its 8th price barometer for new housing in over 100 cities across Metropolitan France. It serves as a valuable source of information about new residential properties that are in the commercialization stage. Recently, the new construction market has significantly contracted. Indeed, we are witnessing a noticeable decrease in the number of authorized residential units in the first quarter of 2023 (-31%). This foreshadows difficult months ahead.

Content:

• The contraction of the new housing market
• The rise in prices for new housing: almost 5,600 euros per square meter for an apartment.
• TOP-15: price increases above average, with Paris leading at over 14,000 euros/sq.m
• High prices in the first ring, sometimes exceeding those in certain areas of Paris.
• Apartments in the provinces remain below 5,000 euros per square meter.

The contraction of the new housing market

The decrease in the number of approved residential units and construction starts. The new housing market has been going through a tough period since the summer of 2022. As for the data from the first quarter of 2023, it does not bode well for the coming months. Indeed, we are witnessing a sharp decline of 31% in the number of approved residential units and a reduction in the supply of new properties.

Furthermore, statistics from the Ministry of Ecological Transformation show a gradual decline in the number of construction projects started. Over the past 12 months (April 2022 - March 2023), there has been a decrease of 8.3%. This is putting pressure on prices for new housing and creating difficulties in obtaining loans.

Pressure on prices for new housing remains due to:

• a shortage of commercialized new residential spaces,
• inflation of construction costs,
• gradual implementation of new programs that comply with the RE2020 standard.

Frank Vignot, the director of the Real Estate Laboratory, emphasizes that the rise in prices for new housing continues in line with the forecasts made last November. However, there is a concerning issue - the difficulties in obtaining loans that many families are facing. As a result, some developers are experiencing rejection rates of 40% to 50% due to the lack of financial solutions for their clients.

The slowdown in commercial activity and the prospects for recovery

Nevertheless, the demand for new housing remains. However, it is not always able to adapt to the prices being offered. Due to the slowdown in commercial activity, many developers are choosing to postpone or even cancel the launch of new projects.

According to experts, significant market revival is not expected until next year, except for exceptional stimulus measures. The current situation highlights the challenges facing the new housing sector. Therefore, solutions are needed to facilitate access to real estate for families.

The rise in prices for new housing: almost 5,600 euros per square meter for an apartment.

Significant price increase over the year

Just a year ago, the average price for a new apartment in cities with a population of over 45,000 was €5,248 per square meter. According to the latest data, this price has increased by 6.6% over the past 12 months. In May 2023, it stands at €5,592 per square meter. Kevin Bruin emphasizes that the rise in prices for new housing has accelerated over the past year. In November of last year, we observed a 5.7% increase year-on-year. However, the new increase of 6.6% is the third strongest price rise recorded since the barometer was established.

The figures indicate a trend of rising prices for new housing, which could pose an additional challenge for potential buyers. This rapid development highlights the importance for individuals to stay informed about real estate market trends and to take these changes into account when making purchasing decisions.

TOP-15: price increases above average, with Paris leading at over 14,000 euros/sq.m

TOP-15: price growth for new housing above average

The cities in the TOP-15 are experiencing higher price growth rates. In these cities, the average price now stands at 5,859 euros per square meter. Thus, the growth is 6.8% over the year. This exceeds the growth observed in all the studied cities.

The top three remains unchanged with Paris in first place.

The top three most expensive cities in the top 15 remain unchanged. Paris retains its first place with an average price of over 14,000 euros per square meter (+6.8%). Additionally, Lyon and Nice occupy the second and third places, respectively.

It is worth noting that 5 cities from the TOP-15 also show price growth reaching or exceeding 7%. Strasbourg and Toulouse increased by 7.7% and 7.6% respectively over the year. Nantes, Toulon, and Lille each grew by 7%, reaching average values of €5,511 per square meter, €5,133 per square meter, and €4,473 per square meter.

“A year ago, Strasbourg, Toulon, and Lille showed more moderate price growth compared to other cities in the top 15. We are observing a catching-up effect in these cities, which are in the lower half of the ranking.” - Kevin Bruin, researcher at the Real Estate Lab.

Le Havre ranks last in the price rating for new housing.

Le Havre still occupies the last place in the TOP-15 and remains the only city not reaching the mark of 4,000 euros per square meter, with an average price of 3,866 euros per square meter.

“The steady increase in average prices in the top 15 cities indicates the continued presence of developers in these areas and the pressure on land prices. It also confirms the attractiveness of large metropolises for families, even after periods of self-isolation.” - Kevin Bruin.

High prices in the first district, sometimes exceeding those in certain areas of Paris.

Concentration of new construction programs in the suburbs of Paris

New construction programs in Paris continue to focus on the suburbs of the city. Among them, the 12th arrondissement stands out as having the highest average price, exceeding 14,900 euros per square meter. This is partly due to the commercialization of the program with an average price of around 15,400 euros per square meter.

Significant changes in the 18th and 20th districts

Significant price changes are observed in the 18th and 20th districts. Over the past year, they have increased by 23.5% and 11.9%, respectively. This change is mainly due to several properties launched at unusually high prices for these areas, ranging from 14,000 to 15,000 euros per square meter. As a result, suburbs that are usually more affordable now have average prices for new housing comparable to those of older housing in central Paris.

Prices for the front row in competition with the Paris districts

In the first ring, several cities have average prices comparable to or even exceeding those of Parisian districts. For instance, Boulogne-Billancourt ranks second among the most expensive cities in Île-de-France after Paris. The average price here is €13,350 per square meter, having increased by 6.7% over the year. It is followed by Levallois-Perret (€13,127 per square meter), Montrouge (€11,272 per square meter), and Issy-les-Moulineaux (€11,059 per square meter).

It should be noted that Saint-Denis has become the last district in the first ring where it is still possible to find apartments priced below 5,000 euros per square meter (including 20% VAT). The price changes are significant, especially in the cheapest cities. Alfortville (4,997 euros per square meter), Bondy (4,597 euros per square meter), Épinay-sur-Seine (4,556 euros per square meter), and Drancy (4,502 euros per square meter) show an increase of 6.6% to 7.5%.

"The rise in prices for new housing continues throughout the Île-de-France region. Only six cities remain, all located in Seine-Saint-Denis, where the average selling price is still below 5,000 euros per square meter. These cities, once considered more affordable, are also experiencing price pressure. This price pressure is also reflected in high rankings, where now five cities outside of Paris are approaching or exceeding the mark of 11,000 euros per square meter." - Kevin Bruylin.

Apartments in the provinces remain below 5,000 euros per square meter.

The real estate market in the province continues to see rising apartment prices. The average price for new housing is now 4,930 euros per square meter, which is an increase of 6.3% over the past year.

Ansi continues to lead.

Outside the TOP 15 cities, the city of Annecy remains the most expensive in France, with an average price of €7,473 per square meter. This represents an increase of 6.3%. Following it are three cities located in the southeast of France: Antibes (€7,167/sqm), Aix-en-Provence (€6,220/sqm), and Cagnes-sur-Mer (€6,080/sqm). The price changes for new housing range from 5.9% to 7.4%.

Attractive cities in the southeast

Cities like Angers, Amiens, Tours, and Rouen are among the areas where housing prices have risen the most significantly. These "Catholic cities" fully benefit from the availability of high-speed trains from Paris. This attracts Parisians looking for an improved quality of life and proximity to the capital and its professional opportunities.

More affordable prices on the coast

The lowest prices, less than 3,700 euros per square meter, are mainly found on or near the coast. For example, cities like Béziers (3,642 euros/sq.m), Campert (3,590 euros/sq.m), Dunkirk (3,524 euros/sq.m), and Cherbourg-en-Cotentin (3,477 euros/sq.m).

Constant pressure on prices for new housing in the province

According to Kevin Bruin, price pressure is also being maintained in the province. In fact, the number of cities with prices below 3,900 euros per square meter has decreased from 21 to just 14 over the year. Moreover, the most affordable cities are experiencing some of the strongest price increases, ranging from 6.6% to 7.5%.