Governing Metropolitan Regions with a Localist Agenda

Governing Metropolitan Regions with a Localist Agenda : London, Paris and Berlin Second Seminar: 22 nd 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

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.

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 PINT A 20 EMPA 15 10 5 0 FR 99 FR 07 IDF 07 PARIS 07

Gentrification 1. 2 1 0. 8 1999 0. 6 2009 0. 4 0. 2 0 Montreuil Pantin Ivry

3 Paris, Berlin and London France and the UK:

Paris and London: London’s exceptionnality greater But a common syndroma: non-affordability as the price of inequalities

Berlin: Welcome to the club? House price change in Germany % change over a year earlier

10000 €/sq m 8000 9000 7000 8000 6000 7000 5000 6000 5000 €/sq m 4000 Series 1 3000 2000 1000 0 0 Berlin Rome Stockholm Paris Greater London Berlin Kreuzberg Berlin Mitte Paris Canal St Martin East London

Thanks for attention