After years of stagnant prices, home prices are finally getting brighter in the City of Light.
Prices of homes in prime Paris rose 4.3% in 2016, according to a report from Savills, a real estate firm. And prices in 2017 are on their way up, the firm reports.
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"Stock levels have been starting to contract over the last year, which will continue to push prices higher in the coming months," Hugues de La Morandière, partner of Savills residential in Paris, said in a statement.
As of February, the average home sold for €780 (US $870) per square foot, according to the report released Thursday. In June, prices are expected to rise to €810 (US$903) per square foot, according to the report, which was based on pre-contract data from the city’s Notary office. That would indicate a 7% rise compared to the previous 12 months.
Breaking that down, the report indicates that prices in the luxury market are up from a low in 2014, the average range being between €1,100 and €1,700 per square foot (US$1,226 and US$1,895). And ultra high-end properties are selling for between €1,900 and €2,800 (US$2,119 and US$3,123) per square foot.
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Savills said lower interest rates and more flexible sellers were also factors in the rising prices, which have been stagnant in recent years. High taxes and a lack of new construction had kept Paris prices down, according to the report.
"Activity has been buoyed by record low interest rates and more-competitive asking prices," Paul Tostevin, associate director, Savills World Research, said in the report. In addition, "the election of Emmanuel Macron as the new French president should mean a period of stability for the Parisian residential market."
Just 9% of the sales were to foreign buyers, but Mr. Tostevin also cites the recent election as a potential confidence builder.
"The new government will bring clarity on legislation and a period of relative stability. This could encourage buyers who have been waiting on the sidelines to act, he said.
Values in popular first, fourth and fifth arrondissements are at their highest level since 2012, according to the report.
(Editor's note: This story has been updated to correct the time period of the 4.3% increase in sales prices in prime Paris. The rise occurred in 2016, not the month of February.)