Governing Metropolitan Regions with a Localist Agenda :
London, Paris and Berlin
Second Seminar: 22nd February, 2013
Institut d’Urbanisme de Paris, Université de Paris Est Créteil (UPEC)
House prices resilience in Paris
Christian Tutin, Lab’Urba/UPEC
(email: christian.tutin@u-pec.fr)
Introduction:
1. What happened to Paris real estate ?
1.1 From buyoancy to resilience
Figure 1 Existing house price in Paris central city 1980-2012
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Source: CINP
(€/m2 - 2012=Q1)
Affordability 1
Sharp contrast between slow but continuous rise of wages and the strong and
accelerating rise in house prices
Not only during the last boom (graph below)
But in the long run :
1 sq m of Paris flat = 350 hours of minimal wage in 1984,
jumped to 590 in 1990, and 850 hours in 2012.
300
Paris house price and hourly wage index
250
200
Paris
150
FR
100
2000 = 100
50
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Affordability 2
Annual Price to Income ratio/1965 value
1-2 Specificities of the last price boom
• Not the mere repetition of the 80’s
– Not the office market, but the housing market
– Not the city core
• Unprecedented strength and lenght
• Widespread and uniform
Figure 15 House price rises - Annual % change 1996-2011
25
20
15
10
Paris
5
France
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-5
-10
-15
Source: CINP (Paris) & EMF (France)
400
House price index Base 1996=100 Paris and France
350
300
250
Paris
200
FR
150
100
50
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1-3 A cumulative disequilibrium dynamics
Not specific to Paris (as in the 80’s –
metropolization process)
An extreme case of a more general process
(observed at all levels of the urban hierarchy)
Consisting in two parallel « waves »:
→ at the bottom of the market : a credit-led boom
• Credit flooded demand from low income
households
• Historically low interest rates, increased duration
of loans
→ at the top of the market: an asset-led boom
• Upper middle class groups investing first belt
municipalities
• Price rises made possible for buyers-sellers to
buy larger homes (or higher quality) in slightly
less valued areas
• + low interest rates → no (or very limited)
liquidity constraint for previous home owners
(sellers/buyers)
No « well behaved » demand curve
Price-volume correlation: demand not decreasing with
prices
+ Lower middle class groups flight from deprived
neighborhoods → strong pressure on intermediate
residential spaces
- While low income households relegated in more
and more remote areas → urban sprawl
+ Low construction rates in intermediate spaces →
quantitative rationing for intermediate income
groups → increased pressure on existing homes
→ gentrification process in first belt municipalities
Intra-urban (spatial content) dimension of the boom
2. The spatial dimension of the market
2.1 The changing geography of house price moves
Three periods in the last three decades:
• 80’s and first half of the 90’s: the « beaux quartiers » as
pilots
• 1997-2007: first belt municipalities at the forefront ;
gentrification of the former working-class suburbs
• Post financial crisis : back to the 80’s ; central Paris
resilience
– Previous tendancy still at work
– More and more asset-led → no impact of unemployment
• And now ?
– This time is the end ?
2.2 Gentrification
•
Gentrification
Poids des CSP
France 99 et 07 Ile de France et Paris 2007
45
En % des actifs résidents
40
35
30
CAPA
25
PINTA
20
EMPA
OUPA
15
10
5
0
FR99
FR07
IDF07
PARIS07
Gentrification
8
1.2
Social composition 1999-2009
7
6
1
Nb of executives for one worker
Paris and 4 municipalities of the
former "red belt"
0.8
5
4
1999
0.6
2009
1999
3
2009
0.4
2
0.2
1
0
Montreuil
Pantin
Ivry
Levallois
Paris
0
Montreuil
Pantin
Ivry
3 Paris, Berlin and London
France and the UK:
Figure 14 Quarterly house price index Germany, France, Sweden and UK 1970Q1-2012Q1
160
2005=100
140
120
100
80
GER
60
FR
40
SW
20
UK
0
1970:1
1974:3
1979:1
1983:3
1988:1
1992:3
1997:1
2001:3
2006:1
2010:3
Source: OECD
Paris and London: London’s exceptionnality greater
But a common syndroma: non-affordability as the price of inequalities
450
Figure 10 House price index (existing homes) in Paris and London 1994-2012
400
350
300
250
Paris
London
200
150
1994=100
100
50
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Berlin: Welcome to the club?
House price change in Germany
% change over a year earlier
€/sq m
8000
10000
7000
9000
8000
6000
7000
5000
6000
4000
5000
Series1
€/sq m
4000
3000
3000
2000
2000
1000
1000
0
0
Berlin
Rome
Stockholm
Paris
Greater
London
Berlin
Berlin Mitte Paris Canal St East London
Kreuzberg
Martin
Thanks for attention