Foreign buyers of homes in Paris at a 15-year high amid falling prices
Falling prices prove attractive as 90 per cent of non-French purchasers already live in the city
The proportion of foreigners buying Paris apartments climbed to the highest in 15 years in the first half as they took advantage of falling prices.
Foreign buyers accounted for 8.3 per cent of the total, up from 7.8 per cent a year earlier, according to data compiled by notaries.
Ninety per cent of non-French buyers of apartments already live in the capital, according to the report.
The biggest group are Italians, which make up 17 per cent of the foreign buyers, followed by the Chinese with 6.5 per cent.
Foreigners "are confident in French property", said Thierry Delesalle, a Paris-based notary, said at a briefing in the city. "They haven't been so prevalent in 15 years,"
Real estate prices in Paris have dropped 3.7 per cent since peaking in the third quarter of 2012, according to notaries and national statistics office Insee.
Values are expected to decline further in the second half as the government attempts to cap rents, which would make homes less attractive as an investment.
Apartment prices, which averaged €8,120 (HK$80,450) a square metre in the three months to June, may drop by 0.8 per cent in the third quarter based on preliminary contracts, and probably will fall to less than €8,000 by the end of the year, Delesalle said.
"The drop may quicken if sellers agree to negotiate," said Frederic Dumont, a notary based in Montreuil, near Paris.
"The price trend is making buyers more cautious and investors tend to stay away, discouraged by taxes, falling returns and threats to cap rents."
A dearth of homes on the market has prevented properties from losing more value.
To encourage homebuilders to be more active, the government last month said it will temporarily cut some taxes on land sales, loosen rules on buy-to-let investments and roll out rent controls in Paris on an experimental basis only.
It also pledged to free up more plots for development, invest more in housing and loosen building rules.
"We're somewhat sceptical about the effectiveness of these measures, which are good but temporary," Delesalle said.
"We need stable measures because it takes four, five or six years to get a building done from scratch."