Paris property prices rise at fastest rate since 1991

Paris property broker Kerstin Bachmann warned clients two years ago that the global financial crisis would trigger a slump in home prices. Last year, they rose at the fastest pace since at least 1991.

Residential values increased by almost 18 percent in 2010 after a 4 percent decline a year earlier, according to Paris Chamber of Notaries data based on prices per square meter. By the same measure, London had a 1 percent increase.

“All that happened was a small dip” after the financial crisis hit, said Bachmann, a partner at Paris Property Group, which handled 25 deals last year worth 40 million euros ($55 million). “Paris proved itself even more as a safe and sustainable investment option.”

French investors are putting more money into Paris real estate, shunning stock and bond markets, at a time when fewer owners are selling properties and insufficient homes are being built to meet demand. Transactions last year were 9 percent below the average for the past decade, Chamber of Notaries research shows.

Prices in the city are rising at their fastest rate relative to disposable incomes since World War I, according to data compiled by government economist Jacques Friggit.

Real estate values in Paris, France’s administrative, financial and political center, have become disconnected from the rest of France. That mirrors London’s premium over the rest of the U.K. and New York’s stronger performance than the U.S. as a whole.

Source: Bloomberg