Roche & Cie

Buying or renting: in which city is it really profitable to acquire your main residence in France ?

21 Sep 2017

Faced with the rise in real estate prices and the gradual decrease in rents … The question of the choice between buying and leasing is constantly arising in France. In order to clarify this subject, the broker has screened the 36 largest French cities in the 4th edition of its annual study “Buy or Rent?” Published this Tuesday, September 5th. With sometimes surprising results.

As regards the purchase, the broker takes account, for an average area of ​​70m2, of both the price per m2 and its evolution (notably calculating the potential capital gain on resale), interest rates on a real estate loan, co-ownership charges and the level of the property tax.

For leasing, the broker obviously retains the amount of rents. But it also evaluates the interest received on the money placed which would have been devoted to the personal contribution in case of purchase (see complete methodology at the bottom of the article).

Of the 36 agglomerations studied, the acquisition of a main residence of 70m2 is profitable on average after 3 years. That is to say six months more than in 2016. Result of the rise in prices of real estate. Last July, average prices per m2 in the pre-owned housing had increased by 4.5% over one year, according to the latest LPI-SeLoger barometer. At the same time, the slight increase in interest rates, which went from 1.4% to 1.6% between December and July for 20-year borrowings according to the CréditLogement / CSA observatory, also offset the potential profitability of an acquisition.

It is in Perpignan that the duration from which a purchase is more profitable than the rental is the weakest: hardly a year!

The buyers in Le Havre, Limoges, Reims or Lille (1.5 years on average) are also particularly well off.

Compared to 2016, the big winners of this year are the buyers of Montreuil, Reims and Toulon, who earn a year of detention necessary to make their property profitable compared to a rental.

At the other end of the spectrum we have:

  • Bordeaux (9.5 years before the purchase is more profitable than a rental),
  • Paris (9 years),
  • Lyon (7.5 years)
  • and Boulogne-Billancourt (7.5 years)

“it is the first year that a city in the region is doing worse than Paris,” notes Due to a considerable price increase in Bordeaux: + 12.1% per m2 signed in the pre-owned houses between July 2016 and July 2017 (compared to “only” + 7.3% in Paris), according to the LPI-SeLoger barometer . The broker also points out the weight of local taxation, with a property tax twice as high in Bordeaux than in Paris. Items that do not seem to discourage buyers, Bordeaux being the preferred destination among the 60% of Parisian executives who wish to leave the Ile-de-France region.

You can consult the full study here.

Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in Real-Estate and Non-resident taxation.