France: In which city is it best to buy a house and where to rent it

In the euro area, we are beginning to see the first, faintest signs of mortgage interest rate reductions as we wait for the ECB to wake up.

Now, has this brought about changes in perhaps the most expensive and, at least in its capital, the most expensive European housing market, i.e., that of France?

Renting or buying?

From a purely financial point of view, is it better to rent or buy in France? Is the rental return on an owner-occupied house such as to allow a return on the investment in an acceptable time frame?

To illustrate this point, on April 10, the real estate platform Meilleurs Agents presented a study on this correspondence based on the purchase of a 70-square-meter property in the 200 largest cities in France.

Specifically, the platform sought to determine “the period of time after which the owner’s wealth becomes higher than the tenant’s,” Meilleurs Agents says. In other words, if buyers plan to sell before the specified deadline, a priori, it would have been more convenient for them to remain tenants.

But calculating the amortization period is complex and hypothetical. It involves a number of assumptions about future property prices, inflation (which affects rents), and interest rates in order to estimate the savings from renegotiating the mortgage (1).

Taking these precautions into account, the study reveals a wide disparity between cities and towns. The recommended holding period ranges from 4 years in Saint-Quentin in the Aisne to nearly 22 years in Les Sables d’Olonne in the Vendée. More generally, in 24 of France’s 200 largest cities, it is necessary to hold property for less than 7 years to break even.

In 62 cities, it is necessary to wait less than 9 years. According to Meilleurs Agents, this is considered an ‘interesting’ time to buy. It is not uncommon to read that a property is held between 8 and 10 years. In fact, aiming for 9 years as a depreciation period seems rational.

Top 10 cities where buying a 70-m2 apartment is more profitable than renting

(number of years after which the owner becomes, potentially, richer than the tenant)

1. Saint-Quentin/Aisne (4 years)
2. Mulhouse (4 years and 1 month)
3. Creil/Oise (4 years and 8 months)
4. Epinay-sur-Seine (5 years and 3 months)
5. Stains (5 years and 3 months)
6. Sarcelles (5 years and 6 months)
7. Belfort (5 years and 7 months)
8. Sevran (5 years and 8 months)
9. Charleville-Mézières (5 years and 10 months)
10. Garges-lès-Gonesse (5 years and 11 months)

But it all depends on the buyer. A first-time buyer, whose family or professional situation is not yet well established, may decide to sell much earlier. On the other hand, in some cities where the population is aging, property prices are under pressure or a more favorable property tax system is being sought, depending on the length of time a property has been owned, notaries are seeing a sharp increase in the length of time a property has been owned.

Paris by surprise

This is the case for notaries in Greater Paris. Nov. 30, statistics show that owners held their apartments for an average of almost 11.5 years between 2013 and 2022, as opposed to 10 years between 2003 and 2012. Houses were owned for an average of 15 years between 2013 and 2022, compared to 13 years between 2003 and 2012.

In Paris, Meilleurs Agents estimates that buying a 70-square-meter apartment is profitable after 11 years and 11 months. This figure is in line with the averages recorded by notaries, but again, not necessarily for all age groups of buyers. According to a recent OpinionWay survey for SeLoger-Meilleurs Agents, conducted between February 23 and March 5, 2024, 42 percent of 18- to 34-year-olds would consider buying a home because of a change in household composition.

Interestingly, despite high prices, Paris is not the city where, on paper, one has to wait longer to get a return from a purchase than renting a similar property, all despite . The main reason for this is the capital’s very high rents, which allow the price to be paid back in an acceptable amount of time.

Interesting provincial cities where the amortization period is longer than in Paris include Bordeaux (12 years and 11 months), Strasbourg (12 years and 7 months), Lyon (13 years and 2 months), and Rennes (13 years and 5 months). However, this is far from the cities that are notoriously popular with wealthy buyers. For example, in Anglet, Les Sables-d’Olonne or Annecy, where real estate prices are influenced by proximity to Switzerland, it is necessary to hold on to the newly purchased property for at least 20 years in order to devalue it.
Top 10 cities where buying or renting a 70-m2 apartment is least profitable

1. Les Sables-d’Olonne (21 years and 9 months)
2. Anglet (21 years and 5 months)
3. Saint-Malo (20 years and 5 months)
4. Saint-Germain-en-Laye (20 years and 2 months)
5. Annecy (20 years)
6. Bayonne (19 years and 10 months)
7. La Rochelle (19 years and 7 months)
8. Versailles (18 years and 9 months)
9. Ajaccio (18 years and 7 months)
10. Vannes (18 years and 6 months)

In these cities, it is much better to be a tenant because the landlord will wait a long time before returning from the investment