Property purchasing power in mainland France (1999-2019)

On 1 January 2019, according to INSEE, 40% of households are renting and 58% own their primary residence. The proportion of homeowners varies from region to region, rising to just over 65% in Brittany but falling to just under 50% in Greater Paris. This has remained stable in France since the subprime mortgage crisis of 2008, having been slightly lower in the early 2000s (55%). It is the ratio between households’ borrowing capacity and property prices that determines households’ property purchasing power*, i.e. the number of square metres that a household is able to purchase for an older property. The analysis will focus on the trends since 1999 initially in mainland France and then in the regions.

*Property purchasing power is calculated by dividing the household’s borrowing capacity by the average price per sq. m of housing sold. Property prices are the average price per sq. m in constant euros at 2017; the monthly payment is one-third of households’ average disposable income in constant euros at 2017; the loan is calculated over a 20-year period, with no personal contributions, at a fixed insurance rate of 0.36%; lending rates are the annual average rates for new home loans to individuals.

Renewed purchasing power since the 2008 economic crisis

In the space of 20 years, between 1999 and 2019, property purchasing power decreased by 13%. It has gone through two phases:

  • a long phase during which property purchasing power fell from around 100 Sq. m in 1999 to 60 Sq. m in 2008 (down 42%), when it dropped to its lowest level. This period was characterised by a continuous rise in property prices (+89% between 1999 and 2008) with credit rates fluctuating between 3.7% and 5.9%;
  • a long phase during which property purchasing power rose (except for 2011), reaching just under 90 sq. m in 2019 (+49% since 2008). This period was characterised by property prices increasing and decreasing until 2015, and then stabilising (-9% between 2008 and 2019). At the same time, credit rates underwent an almost continuous decline from 5% in 2008 to 1.4% in 2019.

Of the three key factors in determining property purchasing power, household disposable income has trended in much smaller proportions compared to the other factors, varying annually between -2% and +2%. Annual changes in house prices ranged from -6% to +14%, and credit rates fluctuated between 1.4% and 5.9% per year.

Property purchasing power in mainland France (1999-2019)

From 50 Sq. m in Greater Paris to 180 Sq. m in Limousin

In 2019, the Greater Paris and Provence-Alpes-Côte d'Azur regions had the least property purchasing power (between 50 and 60 sq. m). These are followed by Aquitaine, Rhône-Alpes and Languedoc-Roussillon, at around 90 Sq. m. These are the regions with the most expensive prices per square metre. Except for Langue-doc-Roussillon, they are also the regions with the highest incomes.

Property purchasing power in 2019 and changes since 2008 by administrative region (breakdown before 2016)

On the other hand, it is in the North-East (except for Alsace) and Limousin that property purchasing power is the highest, being almost three times higher than Provence-Alpes-Côte d'Azur. Limousin has both the lowest prices and incomes in the area.

Smallest gain in property purchasing power in Corsica and Aquitaine

Since 2008, property purchasing power has risen in all regions:

  • households in Corsica, Greater Paris and Aquitaine are the ones that made the smallest gain in terms of property purchasing power, at around 30%. They are also the only regions where average prices per sq. m have increased;
  • Languedoc-Roussillon and Provence-Alpes-Côte d'Azur are among the regions with the lowest property purchasing power, but also those with the highest growth compared to 2008 (over 70%). This is also the case for Burgundy, Champagne-Ardenne and Limousin which, however, are among the regions with the most purchasing power.

Consult the french property market report in interactive version

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