The price of apartments in Paris is set to increase by an average of at least 15% this year, according to the French notaires.

Prices for apartments in the capital rose by an average of 5.1% in the third quarter, making an annual average rise to date of 13.8%.

The average price of property in the capital has now gone over €7000m² for the first time. In no district of Paris is the price of property lower than €5000m².

Indeed, in the 4eme and 6eme arrondissements prices are over €10,000 per m².

Paris is now the second most expensive city in Europe, after London.

Prices Per m²/District Third Quarter 2010

Source: Notaires-Insee

The largest price increases in the capital have not merely been confined to the most prestigious areas.

Thus, although prices in the 2eme arrondissement have increased by 21.8% over the past year, there have also been impressive increases in the 19eme (18.6%) and 10eme (18.8%).

Annual Price Increase by District 2009/10

Source: Notaires-Insee

Somewhat paradoxically the notaires consider that one of the main reasons for the increase in prices is the current economic and financial crisis, as buyers search for greater certainty and security.

In particular they cite:

• The greater confidence buyers have in bricks and mortar over the volatility of the stock market
• Fears over the level of public debt, and the security of personal savings
• The low level of interest rates
• The prospective end of mortgage tax relief
• The large increase in rents, pushing tenants to become owners

As a consequence, demand is outstripping supply, and this is causing prices to rise.

The notaires consider that many of the buyers are those who have already realised a large capital gain on the recent sale of their property, and who are back in the market buying again.

However, they caution (as they did in their last review) about the ability of the market to sustain continued price increases. They believe that next year prices could well drop back. ''The mode of operation of the market should not change in the coming months'', say the notaires, but longer term ''the fundamental question of the gradual deterioration of household income remains unanswered".