The real estate market after the health crisis, an assessment
WIKIMMO
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One year after the health crisis caused by Covid19, the real estate market has been severely affected by this phase, but it has been able to resist, particularly in terms of the volume of transactions carried out in 2020. The property market in 2020 stood out despite the crisis with over one million sales.
The resilience of sales volumes ...
The Health Crisis began in March 2020, with drastic measures for the real estate sector, forcing agents to change their overall working methods. For two months, the sector was slowed down by the closure of agencies, the prevention of visits and the immobility of the ban on signing promises to sell. Thus, the activity is slowing down in France at this period, which can be seen with the 75% drop in the number of promises to sell in 2020. However, far from letting the health crisis get the better of it, the real estate sector has been able to get back on its feet thanks to a technical rebound allowing for example 3D visits. In fact, the market has quickly recovered with more than 370% of promises to sell signed by mid-May 2020. Thomas Lefebvre, Scientific Director of Meilleurs Agents, even says "Over the last few months, the property market has shown resilience and adaptation."
The second lockdown in November could have been a new phase of fear for the property market due to the anxiety of further adaptation of the sector. However, the sector was only marginally affected due to early adaptation of the sector and a strong willingness of individuals to change their daily lives in a particular health context. The strong adaptability of the sector has allowed the development of digital tools to meet the needs of individuals, such as virtual visits or electronic signatures to make speculations more concrete.
... implies changes on the price side ...
In general, prices in the real estate sector have increased somewhat nationally since March 2020. Since the beginning of the health crisis, there has been an increase of about 2%, especially after the first containment, as in Paris, but according to Meilleurs Agents, the trend is towards stabilisation of property prices. Real estate has even been slowing down since September. Paris, for example, has seen a 2.5% drop in property prices. However, this does not imply a market reversal, it is only a consequence of the health crisis which implies the adaptability of the sector.
... which leads to an upheaval in demand
The changes on the price side imply an obvious disruption of demand. Indeed, during the last six months, in France, there is less demand to buy a property. Yet, at the beginning of the first containment, the market was on the rise due to the numerous requests from buyers. Thomas Lefebvre, Scientific Director of Meilleurs Agents, points out one of the causes of the drop in demand "Several factors explain this weakening of demand. On the one hand, households are wary of the uncertainty of the coming months. There is thus today, a rebalancing between buyers and sellers, which tries to regulate the real estate sector within a health context causing a real estate tension.
Thus, as spring approaches, when the real estate sector is more dynamic than the rest of the year, the market looks somewhat reduced. However, activity should continue to regulate itself gradually, remaining at a high level due to the still low credit rates and rising household savings in 2020.
A slowdown in demand
In recent months, there has been a stabilisation of prices compared to the boom in prices at the beginning of the containment. In fact, in March 2020, the property market was under pressure from the search for properties due to the containment announcement. The number of buyers was much higher than the number of sellers, which can be measured by the Best Agents' Property Tension Index (PTI). This indicator analysed that the number of buyers was 30% higher in Lille than the number of sellers.
Other cities have a high ITI, with buyers outnumbering sellers by 20% in cities such as Rennes, Toulouse and Paris. Finally, some cities have seen a smaller but still notable increase in real estate tension, such as Bordeaux and Marseille, which have 10% more buyers than sellers.
This difference between buyers and sellers has boosted real estate projects, activity exploded in May, as prices increased, the number of properties available for sale decreased. Paris is seeing a rebalancing between the number of sellers and buyers. Thomas Lefebvre, scientific director of Meilleurs Agents, points out that there are many reasons for the recession in demand. He singles out three of them: fear of the instability linked to the crisis, the end of telecommuting and the uncertain future.
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