How the COVID crisis affected the French real estate market

Dealing with the pandemic has required stringent measures that have restricted economic activity. Tourism in France was put on hold, followed by a significant drop in this particular sector. However, various industries have been affected differently by the raging pandemic. While the crisis has brought many sectors to their knees, the French real estate market has remained relatively stable.

According to statistics, real estate sales have not undergone huge changes. There was a significant drop from March to May due to the restrictions put in place. People in the process of buying have been stopped dead in their actions due to COVID-19, which halted the purchase of a property. However, the market regained momentum quickly when economic activities were able to pick up.

What are the current trends and forecasts? In this article, we review the current situation, statistics and forecast for the future.

 

Tariff trends

As for the prices, it is essential to note that they are subject to small adjustments. Mid-range real estate has seen minor changes, while luxury properties have remained stable. At the start of the pandemic, sales were suspended. This action results from strict restrictions, which only allowed essential workers to leave their homes. All notary offices and real estate agencies were officially closed, making it impossible to finalize the purchases. Because the banks were not functioning, people could not apply for loans, which further delayed the whole process.

However, this short break was followed by an increase in investment. The restrictions were lifted in mid-May when buyers were finally able to complete the delayed purchases. Since then, the players concerned have continued their business activities, so that people can now apply for a loan from banks and use the services of real estate agencies. This means that the real estate market quickly regained its power resulting in the highest real estate demand, according to a report by Notaries of France.

Why the real estate market has it remained relatively stable, even during a major economic crisis?
Experts have made various statements that support the current growing trend of estate market. The closures have prompted people to think about moving from downtown to the suburbs to access outdoor space and get a larger property for the same price. In addition, confinements imposed working from home. Many people have realized that they can work remotely, offering the possibility of keeping their jobs while benefiting from the quality of life and the space available in rural areas.

According to Notaires de France, security is one of the main reasons for the growing interest in real estate investment. Buying physical assets is considered the safest form of investment during a recession. Other investments such as stocks are considered risky and are avoided due to the massive dips as seen at the start of the COVID crisis.

 

Changing buyer's preferences

While some preferred the sunny seaside or the verdant countryside, remote working and confinements changed the requirements of the buyer. They are now looking for houses with gardens and apartments with balconies. Properties close to the Seine or to parks are in increasing demand because Parisians now want to get closer to nature.

According to current trends, real estate demand in Paris is declining. Paris, known until then for being the city with the highest price per square meter, is starting to see its price drop slightly. This is due to the growing tendency to move outside of city centers. As a result, the prices of real estate in the surrounding area will increase.

 

New housing

COVID-19 restrictions have halted economic activity, including construction sites. This resulted in a decline in the availability of new housing by 3,1%. Despite the increase in the number of new permits, the supply of new construction will remain stable as the industry has returned to its initial state.

However, the supply of new housing is expected to increase due to the PINEL law. Private investors will benefit from certain advantages, such as lower tax rates. The French government introduced this measure to revive the construction industry, which was a success. Another measure that will stimulate the growth of this sector is the capital gains tax relief. This will motivate people to sell their property or land for construction, stimulating the growing industry and making newly built homes more secure.

 

conclusions

Although the raging pandemic has had a colossal impact on the economy, the real estate market has remained relatively stable. The only thing that will change are the preferences of buyers, as they are now looking for a property with outdoor space like gardens or balconies and out of town.

Knowing the current trends in the real estate market, buying real estate in France is a stable and secure investment. Also, selling is a good option as the prices haven't dropped dramatically. As a professional real estate agency, we are at your disposal to support you during this buying or selling process.