The crisis does not seem to affect the real estate market. the
INSEE quarterly report is equivocal: everywhere in France prices continue to climb with + 5.9% on the prices of old housing over the year 2021. Paris is an exception since the capital recorded only a drop of 0.2% on the second trimester. The province has recorded an increase of 7%, while in Ile-de-France prices have only increased by 3.1% over the last twelve months. According to INSEE, these figures seem to indicate a desire of the French to find houses in medium-sized towns, or even in rural areas. As further proof, the annual rise in house prices (6.9%) is greater than that of apartments (+ 4.6%). A first since 2016. Explanations with Jean-Marc Torrollion, president of the National Federation of Real Estate (Fnaim).
There is a significant increase in housing prices in the provinces. How to explain this evolution ?
The French real estate market is experiencing a phenomenon of redistribution of price dynamics. The so-called medium-sized towns and rural areas are increasingly popular with buyers. Demand is currently greater than supply, which creates a scarcity effect that favors sellers. There is a clear craze around human-sized habitats and cities. The French have found themselves face to face with their furniture and perhaps express new desires.
Conversely, Île-de-France recorded a less substantial increase in prices. In Paris, prices have even fallen in recent months …
We must already distinguish the metropolis from the small and large crowns which experience a migratory effect. The markets are not the same everywhere in the region. But it is undeniable that we do not experience confinement in Paris as we experience it elsewhere. There is an anxiety-provoking phenomenon that one does not encounter outside of large metropolises. I think it is linked to distances, to transport, but above all to the quality of housing. People want to be able to get oxygen and access large areas. Research seems today to focus on the individual pavilion, the apartment with a large surface to integrate teleworking, have better family comfort in complete safety and at an affordable price. We can then understand that Paris is experiencing an air gap. It is also necessary to underline the less increased presence of the important foreign clientele due to the pandemic. As well as the failure of investors who had bet on tourism and Airbnb. Their goods are now for sale.
Since 2016, we have never seen an annual increase in house prices more marked than that of apartments. How to explain this trend, which is the same throughout the territory?
Before the first confinement, there were almost as many requests for houses as for apartments on our websites. From this period until now, there is a 30% differential between these requests. The trend was completely reversed between 2019 and 2021. We can see that the French are looking for single-family homes and we can feel it in terms of prices. We are now looking for a cocoon in which we can apprehend crises like that of Covid-19.
Research seems today to focus on the individual pavilion, the apartment with a large surface to integrate teleworking (…). We can then understand that Paris is experiencing an air gap. “
The number of real estate transactions has been increasing for three consecutive quarters. How to explain such growth of the market?
First of all, you have to take into account a “catching-up” effect so as not to get carried away too quickly. At the end of the first containment in May 2020, no transaction had been carried out. There was therefore the natural flow coupled with the exchanges that should have taken place during the months of closure. All this is therefore included in the statistics that we are talking about. The signals are still green since the investment is working, first-time buyers buy and second-buyers sell and buy back. Finally, real estate assets remain a safe, tangible and emotional value that always attracts.
And these perpetual price increases do not hold back the French?
On the contrary, it is reassuring. Buying your pavilion and realizing six months later that you can resell it at the same price if not more expensive is reassuring. There is a relative wealth effect that creates an investment spiral.
What could come to slow down this trend?
First, the rise in interest rates, even if it is not on the agenda. Then, the energy renovation obligations. Today, what is called the green value is not taken into account. Investors should be extremely careful that certain properties will be prohibited for rental in 2025, 2028 or 2034 depending on their energy classification. We are therefore in an unknown field. We will have to see what the market will do with regard to the requirements of the climate law.