Property prices in France continue to rise: the reasons by Oldypak capital lp


How real estate is faring in France by Oldypak capital lp

The pandemic has had a strong impact on the property market in France. And it’s not even about the slump in demand and the subsequent buying activity, but about people’s behaviour. Many people have decided to change their place of residence to buy a spacious country house along with a small flat in the city. Due to this in 2020 property in France has seen a price increase of around 6.4% and this continues to be the case now.
Despite the impact of the pandemic the sales of flats and houses have only fallen by 4% in 2020 whereas in the previous period there has already been a positive increase.

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Experts cite low interest rates, which have fallen to their lowest levels, as the main reason for the increased demand for home purchases and the rise in the price of properties. Quarantine restrictions and the switch to a remote working format led to the departure of residents from large cities to smaller towns. As a result, sales volumes in metropolitan areas have dropped to a record low. A striking example is Paris, which used to be the leader in real estate transactions, and during 2020 buying activity there fell by 12%. According to analysts, people have begun to move en masse not only because they want to settle in a quieter region. Real estate prices in big cities have been rising steadily for a long time, and not everyone can afford to buy a flat or a house here. And remote working has made people feel free to move and they have gone to the regions for cheaper properties. At the same time, housing has started to become more expensive in localities across the country as a result of the increased interest in local markets.

The move to the countryside has stimulated a high demand for secondary housing, while interest in new builds has declined. Sales of new flats and houses fell by 25% last year, which led to a decrease in construction activity.
As for the demand for luxury housing, it has not declined. And the market was stable even during the pandemic, with a 6.1% increase in prices for premium properties recorded by the end of 2020. In this segment, the secondary market was also more popular than new housing.
Investors were primarily interested in large villas, with demand coming mainly from buyers from France, but also from Monaco.
In general, the local real estate market is actively developing, which contributes to an increase in the cost of housing. Expert Ivan Smirnov notes that in the near future, the rate of price growth will slow down and the segment will stabilise.


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