April 2021: France real estate update

The real estate market in most of France is looking up

While new measures to limit the spread of the virus have only just come into force, the real estate market seems determined to take advantage of the return of the sunny days. Indeed, the upturn in activity traditionally recorded by the market during this period is already being felt in the Real Estate Tension Index of Meilleurs Agents. Since the beginning of the year, with the exception of Strasbourg and Lille, all main French cities have seen their number of buyers increase in relation to that of sellers. Thus, Toulouse, Montpellier and Rennes now have 12%, 9% and 7% more buyers than sellers respectively, compared to 7%, 4% and 0% last January. This slight rebound can be explained by the renewed confidence of the French (only 47% of project leaders remain “wait-and-see” vs. 55% in November 2020) which is fueled by good financing conditions. One consequence of this burst of dynamism: after February which was in the red, prices in the fifty largest cities in France (excluding Paris) are on the rise again (+ 0.1%). Even the municipalities in difficulty last month are recovering their footing – like Montpellier (+ 0.4%), Toulouse (+ 0.4%), Lyon (+ 0.3%), Nice (+ 0.2%) ) or Bordeaux (+ 0.2%) And yet … if the 2021 year begins under good auspices, the resumption of real estate activity appears to be sluggish compared to previous springs. Of course, homeowners are making a comeback on the market, but… Slowly. Since the start of the Covid-19 epidemic, excess demand has halved.

What to expect from this new confinement?

For the third time in the space of a year, the whole of France is living to the rhythm of new confinement. Emmanuel Macron’s announcements on March 31 come at a time when household confidence in brick and mortar investments is in a good place: 85% of them still see real estate as a solid investment and 70% consider it the most important and secure investment. Not to mention, as expected, homeowners now seem to have adjusted to the pandemic with regard to their real estate projects: only 14% of current projects were abandoned or postponed during 2020. And again … This decision to stop looking, or to postpone, has mostly affected those projects started before the health crisis. Between the first and the second confinement and even after it, the rate of abandonment or postponement of real estate projects did not change appreciably.

The reason? Agencies, banks, notaries … After the shock of the first months, real estate market players have been able to develop their tools to continue to support buyers and sellers (electronic signings, remote prospecting systems, video tours, etc.). A new way of working which, far from discouraging individuals, on the contrary enabled them to complete their project without delay. While the ban on visits, the slowing down of the processing of loan files and the cancellation of moves known during the first confinement had a very strong impact on the average duration of projects, the systems put in place since by professionals in the sector have reversed the trend. Thus, the buyers and sellers of pre-lockdown projects saw the average duration of their project extend by 3 and a half months. Assessment: The new measures taken to try to stem the circulation of Covid-19 in France are not significantly affecting current real estate projects anymore. Especially since visits, just like last November, are still allowed.

Paris suffers from the corona virus crisis

While 24% of French people have felt the urge to change region or city since the start of the pandemic, 35% of Parisians have expressed a desire to leave the capital. Among their main motivations: the putting under cover for several months now of everything that makes the charm of Parisian life (closing of cultural places, cafes, restaurants …) but also the search for open space and greenery. Enough to push more and more of these city dwellers, often confined to small apartments, to question their Parisian purchase plan.

This disenchantment, even disinterest, for Paris is felt in real estate prices, which continues to decline for the 8th consecutive month (-0.5% in March and -3.3% since August 2020). While small properties are not immune to this phenomenon (-2.3% in one year), it is especially larger properties that suffer (-3.7%). Families with children are increasingly looking towards the rest of Ile-de-France, which, with the same budget, offers them much greater real estate purchasing power with doubled or even tripled living space. The big winners of this new state of mind are therefore the small and the big towns nearby (+ 0.3% and + 0.4% respectively). The return of good weather in the capital may not change things.  In view of the current news on the vaccination efforts and the new confinement, central Paris prices may continue to decline in the immediate future.

Source: Meilleurs Agents