Paris luxury home sales hit by tax on wealthy
Upmarket house prices in Paris reversed two years’ growth in the first half of 2012, falling 3.4 percent on lower demand among well-heeled Parisians looking to flee France’s rising taxes, property agent Savills said on Monday. The decline in Paris came as prices rose in rival financial centres London and New York, 2.8 percent and 1.1 percent respectively, with the Big Apple seeing a world record price for an apartment, Savills said in a report on major cities.
“Paris is the biggest loser of 2012,” Savills said, citing uncertainty around the future of the euro zone as another reason for the decline. “Further price falls now seem unavoidable in the French capital, and London is the potential beneficiary as international money seeks an alternative haven within the geography of Europe, but outside the euro zone,” it said.
France’s left-leaning prime minister, Francois Hollande, scrapped tax breaks for the wealthy i n July and has been considering a 75 percent tax rate for top earners, prompting Parisian bankers to consider moving abroad.
Parisian property prices ballooned in 2011 as investors sought to shelter their wealth from low interest rates, said Alexander Kraft, Sotheby International Realty’s head of France and Monaco. That bubble was now bursting, he told Reuters. “A lot of the real estate agents that sprouted up a year ago are beginning to close their doors.”
In April, property agent Knight Frank said online enquiries from France had spiked 19 percent year-on-year for homes in the priciest districts of London, a city also buoyed by demand from Russia and the Far East. Last December, the world’s most expensive flat per square foot was bought by Russian fertiliser tycoon Dmitry Rybolovlev as a base for his student daughter at a price of $88 million, or about $13,000 per square foot, from former Citigroup chief executive Sanford Weill.