According to the High Council of Notaries, 2021 should have broken all sales records. While there has been optimism, which has been accompanied by a general increase in prices, the other side of the coin is that this inflation is eroding real estate purchasing power…
The real estate market is clearly impervious to Covid-19. The numbers given by the High Council of Notaries demonstrate this. Indeed, 2021 is shaping up to be an outstanding year, with no doubt a sales record. A state of exhilaration that conceals problems. “There is no more stock; everyone wants a house, but there isn’t enough supply.” This causes a supply-demand mismatch, which leads to a pretty fast increase in prices,” says Me Thierry Delesalle, notary in charge of national real estate data at the Higher Council of Notaries.
A fantastic year. 2021 will be one of the strongest real estate years, with slightly under 1,200,000 transactions over twelve months (1,198,000 by the end of October 2021). Sales grew by 14.5 percent over the same time in 2019, or before the outbreak. “Absolutely incredible improvement,” says Frédéric Violeau, a notary responsible for national real estate data.
A shift in perspective. More room, less money, and a higher quality of life are the three pillars around which consumers make their decisions. According to the notaries, the French have refocused on their basic requirements as a result of the health crisis and the expansion of teleworking. As a result, this dynamism helps less densely populated areas, where home purchases have increased since 2019. It is also a buyer reaction to the high cost of real estate in major cities.
Prices are increasing everywhere. According to the High Council of Notaries, the price of old flats has risen by 5.2 percent in the last year. “They are growing quicker in the provinces (+7.5%) than in the Île-de-France (+2.5%),” explains Frédéric Violeau. The ancient home, this year’s showpiece offering, bears responsibility for this increase. Its average price has increased by 9% in a year! Individual housing growth is fastest in the regions (9.4 percent in over a year), while it is limited to 7 percent in the Paris region.
The adjacent departments are appealing. Another unmeasured impact is the departure of Ile-de-France inhabitants (not an exodus) in the departments surrounding the island. Buyers from the Paris region account for 27 percent and 35 percent of purchases in Eure-et-Loir and Eure, respectively, a 7-point increase in one year. A tendency that drives up prices, purchasers in the Paris region are generally well-off financially.
Real estate purchasing power is under threat. On the other hand, real estate purchasing power is declining in all areas of the market. Despite reduced mortgage rates, we purchased smaller properties in 2021. On the French scale, the surface area of flats acquired is 50m2 for 800€ of loan payments per month at a 1.13 percent interest rate (-4m2 in one year). Individually, the tendency is the same. The average surface area of the residences acquired is 140m2 for a monthly loan repayment of 1300€. In one year, the area has shrunk by 8m2, and in two years, it has shrunk by 14m2.
Will prices continue to rise in 2022? We were on track for a large price rise based on preliminary contracts for the fourth quarter of 2021. According to notaries, apartment prices in Province would rise 7.7 percent, while just 1.4 percent in Île-de-France. House prices are expected to rise 9.6 percent in the province and 8.4 percent in the Île-de-France, according to forecasts. The Covid problem is still having an impact. Contact us today to buy or sell property in France.
