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Paris homes are hot

International

Johannesburg - Bankers swapping London for Paris after the Brexit vote are moving from a slumping luxury-homes market to a red-hot one.

A weakening pound has “meant differences in prices between Paris and London have fluctuated significantly over the last 12 months,” said Databiens, the French unit of property researcher LonRes. “Since the start of 2016, prices in Paris have begun to rise, whereas in central London we saw values fall.”

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AP Photo/Francois Mori

That’s bad news for bankers relocating from London, with HSBC executives saying they plan to move as many as 1 000 traders to Paris. Home values in the French capital rose 9 percent in the first quarter from a year earlier and properties are 22 percent more costly for sterling buyers, the researcher said. The price surge in Paris marks a turnaround from 2012 through 2015, when values fell there while London’s luxury homes were soaring.

The French presidential election vote may have an impact on the real estate market as Republican Francois Fillon has said he’ll get rid of a wealth tax and reduce the amount of time a second home needs to be held before it’s exempt from capital-gains tax, Databiens director Laurent Lakatos said by phone.

Read also: Greater price 'realism' in SA home market

Fillon is one of four leading contenders going into Sunday’s first-round election for the presidency, though polls suggest he lags behind centrist Emmanuel Macron, who has said he’ll keep a wealth tax on property. The top two candidates go through to the runoff vote on May 7. 

Demand in the French capital has been driven by buyers seeking to take out 25-year fixed-rate mortgages ahead of any future interest rate increases, Lakatos said.

The premium for houses and apartments in the UK capital over Paris has fallen from more than 130 percent in mid-2015 to 71 percent in March, in part because of sterling’s decline, Databiens said. The pound has fallen 5.5 percent against the euro in the last year, according to data collected by Bloomberg.

London home values grew at their slowest annual rate in almost five years in February as values in the capital’s most expensive boroughs including Camden and Kensington & Chelsea fell, according to Acadata and LSL Property Services. A tentative recovery at the top end of the London market “appears to have fizzled out,” the report said.

Prices across London rose just 0.1 percent in February to an average 606 780 pounds ($777 650). That left the annual gain at 1.5 percent, the weakest reading since April 2012.

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