The pandemic has had a strong impact on the real estate market in France. And it is not even in the sharp drop in demand and the subsequent activity of buyers, but in the behavior of people. Many have decided to change their place of residence to buy a spacious country house along with a small apartment in the city. Due to this in 2020 real estate in France showed a price increase of about 6.4% and this trend is continuing now.
Despite the impact of the pandemic, apartment and house sales fell by only 4% in 2020, while in the previous period there was already a positive growth trend.
The main reason for the increase in demand for the purchase of housing and the rise in property prices experts call low interest rates, which have fallen to their lowest values. Quarantine restrictions and the transition to a remote format of work led to the departure of residents from major cities to smaller towns. As a result, sales volumes in metropolitan areas have dropped to a record low. A striking example – Paris, which used to be a leader in real estate transactions, and during 2020, buying activity there has fallen by 12%. According to Oldypak LP property 2022 report, people began to move en masse not only because of a desire to settle in a quiet region. For a long time in the big cities is steadily rising property values, and not everyone can afford to buy an apartment or house here. And remote work has made people free in terms of where to live, and they went to the regions for cheaper properties. At the same time, housing started to become more expensive in communities across the country, which was a consequence of increased interest in local markets.
The move to the countryside stimulated a high demand for secondary housing, while interest in new buildings decreased. Last year, sales of new apartments and houses fell by 25%, which led to a decrease in activity in the construction segment.
As for the demand for luxury housing – it is not declining. And the market was stable even during the pandemic, by the end of 2020 there was a price increase of 6.1% for premium class objects. In this segment the secondary market was also more popular than new housing.
Investors are primarily interested in large villas, and the demand for them has formed mainly buyers from France, as well as from Monaco.
In general, the local real estate market is actively developing, which contributes to an increase in home values. According to Oldypak LP property 2022 report, the growth rate of prices will slow down and the segment will stabilize.