PARIS (Reuters) - Few experts can rival Jacques Friggit for insight into property prices.
Using eight centuries of housing data, the French government economist has charted how the Parisian market crashed with the Black Death in the 14th century, bounced back during the Renaissance and collapsed again with the World Wars.
Now Friggit (whose work is summarized in English at r.reuters.com/nev38t) says Paris home prices relative to household income are at their highest since the 1930s, when the stock market crash prompted investors to seek safety in real estate. Buying a home now eats more of a Paris resident's income than any time for 80 years.
Prices have more than doubled over the past decade, and remain high even though the country has slipped back into recession and jobless claims are the highest on record.
Fewer properties are being sold than a year ago, but Paris prices have barely dipped and continue to average around $1,000 per square foot. This compares to around $790 per square foot in central London, according to 2012 figures provided by British lender Halifax.
As central banks pumped cheap money into the global economy to revive growth, property consultants say many investors saw Parisian real estate as a better bet than both government bonds and stocks.
Record-low interest rates have also encouraged French buyers to take on debt. They now have twice as much mortgage debt as in 2000, though at 65 percent of disposable income the burden still lags the United States, where it is over 80 percent, and Britain, where it is 120 percent.
Along with other factors, this leeway explains why French home prices rebounded after the 2009 crisis, says Friggit, who expects prices to eventually fall back into line with trends in household income.
Edited by Sara Ledwith