Paris real estate set records in 2021

In this changing world, the rising property rates are no longer balanced out by lower borrowing rates.  The record setting year of 2020, excepting the 8 weeks of confinement, has continued on in strength, with 2021 setting records with almost 1.2 million sales, which is comparable to 2019. Everywhere in France, prices are rising, even into the double-digits on the coast. In Ile-de-France, the increase in the outer suburbs are most impressive.“For the moment, activity is very sustained and, in 2021, the real estate market has set multiple records”, observes, in his economic report of January 3, Laurent Vimont, president of the Century 21 network, whose 925 agencies have achieved 50,000 transactions over the year. 

Even MORE records set

• 2021 has also set the record for speed of sales concluded. Sales are being completed in 80 days in 2021 versus the 91 day average of a year ago. 
• Housing prices have also hit record highs, increasing for the seventh year in a row, 7.7% / 267,524€ for houses, and 5.6% / 227,897€ for apartments. 
• 2021 has also hit a record for highest debt held by households. Debt has raised 1.13% and loans have been extended to an average of twenty-one years and nine months. The number of loans have also increased 16.7%, according to the Banque de France, and reached, from November 2020 to October 2021 (not counting loan buybacks), 225.2 billion euros, against 193 billion in 2020 and 2019.
• Investors have also broken a record of purchases, according to Century21, and make up 30.2% of transactions, compared to 2014’s 17.4%.

“Outdoor space”

“It is the classic bourgeois apartment, 150 m2, without view or terrace, between 1 million and 2 million euros, which sells the least well, notes Charles-Marie Jottras, president of the group, because our buyers are now demanding an outdoor space and renounce it at any cost.” Sales of houses and mansions with gardens therefore doubled over the period.  In Essonne, the prices of apartments have risen by 12.2%, and 9.9% in Seine-et-Marne. “Houses in Yvelines have appreciated by 12% in one year, unheard of in the memory of a real estate agent,” comments Mr. Vimont. Retirees are more present than ever on the Parisian market, at the initiative of 8.3% of Parisian transactions, but above all investors, now in 31% of business. An almost classic phenomenon, since 2015, but which is accelerating: families are leaving the capital, as evidenced by the figure of 6,000 fewer kindergarten and primary students and 900 lower secondary school students at the start of the school year in September 2021, compared to 3,700 in 2020. and always less than 3,000 previously. “Families don’t necessarily go far,” according to Mr. Vimont. They make leaps and bounds, first in a small crown, then in a large one, in search of the extra room and the terrace that they lacked. »

The only area of decline is seen in the capital, Paris prices dropped by 2.2%, to an average of 10,367€ per square meter, mainly in the last quarter of 2021. However, buyers paid an average of 511,700€ for a 49.3 m2 apartment, losing 3.7 m2 in one year, in a market that is nevertheless dynamic, where sales times in Paris are slightly longer, at 72 days on average, compared to 62 days in 2020. It is not surprising that buyers are increasingly recruited from among the wealthiest socio-professional categories, senior executives and liberal professions claiming 42.5% of the market. Real estate agencies specializing in Parisian prestige properties are running at full capacity. The Daniel Féau group thus announces a turnover increase of 39%, between January 1 and November 25, 2021, driven by transactions of more than 3 million euros, the number of which is up by a good 120%. 

“Three migration phenomena are at work,” analyzes Jean-Claude Driant, professor at the Paris School of Urban Planning. A centrifugal force that pushes the inhabitants of the centers towards the peripheries; Parisians who can telecommute who join other large cities such as Marseille, Bordeaux, Nantes or Rennes, the most fashionable; and some households, minority, tempted to settle in small towns or in the countryside. The arrival of Parisians in the regions, where they drive up real estate prices, is not without creating, here and there, tensions with the inhabitants who feel evicted. Some Breton ecological and regionalist movements, for example, demand a specific resident status; in Bayonne (Pyrénées-Atlantiques), on November 20, 2021, 8,000 demonstrators demanded the right to “live and stay in the Basque Country”.

For 2022, Mr. Vimont is less serene: “If inflation persists, causing loan rates to rise, I fear a “firedamp” on the real estate market.” Other observers, including credit brokers, fear a restriction of credit by the banks which, from January 1, must imperatively apply the prescriptions which, until now, were only recommendations of the High Council for Financial Stability ( HCSF): no loan beyond twenty-five years; no effort rate beyond 35% of income, even for investors.

 “The HCSF welcomed, on September 14, that the banks are normalizing their practices, with, in July 2021, only 20.9% of non-executive files”, reassures the president of the Century network. “It is also on the side of real estate purchasing power that comes the concern, ” he observes. The banks retain the possibility of overriding these limits in 20% of cases. Buyers, especially first-time buyers, are discouraged by the rise in prices that low borrowing rates are no longer enough to offset. It is now necessary, according to his calculations, 32,153€ of personal contribution to cover the average price of an acquisition using a loan over twenty years, with a monthly payment of 1,000 euros, while 6,000 euros was enough in 2020, and no contribution was required before. Finally, the renewed appeal of second homes is confirmed: they represent 7% of purchases, compared to 5% in 2020.

Source: danielfeau.com