Why are housing prices rising in France?

As a general rule, when we approach the price of housing in terms of purchases, we are talking about the price per square metre. When we talk about the price of a rental, this is different. The price of housing has increased in France since 1997. It decreased slightly at the end of 2011 in the regions and in the Ile de France. The price per square metre has risen faster than for rents regulated by law. On the other hand, this increase has been felt much more in the city centres where many services are available: transport, shops etc…

Why have prices increased so much and are they still so high?

Housing prices in France are still as high as ever because the principle of supply and demand is applied. In France, there are more requests for housing than offers. Nowadays, more and more people want to buy real estate, especially with real estate loans, which offer attractive interest rates and quite long repayment periods of up to 30 years. As the population grows, the number of households increases at the same time. In addition, as the number of divorced people has increased, this suggests that more and more people are living alone. This is driving up the ever-increasing demand for housing and thus driving up prices.

Why is it that no more housing is being built for everyone?

At first, there are few plots of land to be built in the city. Secondly, urban planning laws and standards regulate the maximum height of buildings. For example, it is impossible to build towers in certain areas of Paris. Finally, building a home is becoming more and more expensive. The price of materials increases, with for example the price of sand to make concrete, and buildings must meet new standards such as the mandatory presence of elevators, basements, low energy consumption, etc.

Demand continues to grow. Even

if the increase in these prices is supposed to slow demand, we see that demand is still there. Some households are therefore anticipating earlier. They buy faster in the hope that the prices of their housing will remain at the same price or increase again over time. All these acquisitions keep housing prices high. Some economists and specialists then speak of a real estate bubble. However, we can only talk about a real estate bubble if it were to burst. In other words, that if house prices fall sharply, it is very complicated to know the evolution of house prices. Whether prices will increase, fall, stagnate or decrease slightly is difficult to know because the review of specialists remains very divided.