French property: Analysis of the market
The analysis of the real estate market is derived from the French property marker report of notaires de France. It presents the real estate situation in France: trend and evolution of real estate prices.
Consult the french property market report in this interactive version
French property in Q2 2020: Coming to fruition and wait-and-see
After a typical post-holiday period, it is now time to take stock of how 2020 will close. We are approaching a crucial time. While in Q2 2020, the volume of total transactions with older properties over the last twelve months remains slightly above the million mark, growth compared to the previous year is down: from +10% in January to +2% in April.
This ﬁgure made a slight recovery in May 2020 (+3%) but then fell in June (-0.7%) for the ﬁrst time since July 2015. There has been a strong rebound in terms of post-conﬁnement signings of pre-contracts, and notaries witnessed strong activity through to mid-August; ongoing sales which were not able to be signed could also be ﬁnalised thanks to remote electronic signings set up by notaries. Yet as the pandemic and economic uncertainty persists, a wait-and-see approach is required at this stage. It is reasonable to expect that the conﬁnement may derail the million transaction mark by year-end: 2020 will be over 10 months and while there was a rebound in the summer, not everything will be regained.
The shift seen in February 2020, unrelated to the health crisis, may also lead us to believe that the property market – which had a steadily growing stock and dynamic activity fuelled by still low rates – had indeed peaked in its catch-up since February 2013. The threshold of 900,000 sales year on year in 2020 seems to be the yardstick we’ll use to assess the year.
We can anticipate stagnating sales volumes through to the end of the year, with little sign of recovery until next spring and for only certain parameters:
- an economic catch-up with GDP expected to grow by +7.4% in 2021 (according to Bank of France forecasts on September 14), a recovery which should also beneﬁt real estate;
- a health crisis under control.
The price curve has remained unaffected by these changes in volume. Indeed, prices are moving with a lag with respect to volume changes and only a strong and lasting drop in the number of transactions would impact prices. Covid-19 has not lasted long enough to signiﬁcantly alter attitudes and therefore prices. Only persistent and major economic consequences would be likely to achieve such a change.
Outlook for commercial real estate and rental investment
The commercial real estate
It is expected to bear the brunt of the coming months and may be highly impacted both in terms of volumes and prices. Business tied to tourism, hospitality, catering, nightclubs and bars have been severely affected by the counter-Covid-19 measures, be it for the restrictions now in force or the businesses not being set up given the current climate. The sector could, however, undergo a significant recovery once a remedy is found. There is ongoing concern for office buildings. The growing trend of teleworking will lead to a rationalisation of needs and costs, urging this sector is to downsize.
The rental investment sector
Already shaken up by the restrictions on seasonal rentals especially in large cities and tourist towns – it is expected to suffer from the Covid-19 restrictions imposed on movement and the drop in tourist numbers. Individuals requiring a furnished rental to meet their repayments and expenses may be forced to sell in order to balance their finances.
Property market: the new housing market
- I want to buy an apartment. My bank refused my loan. Can I ask the seller a staggered payment of the selling price?
- I buy a property for which the mandate of sale provides that the payment of real estate agency commission is the responsibility of the seller. Why is this commission included in the base for calculating notaire fees?