Find out in this blog post a conclusion on real estate at the end of 2021 and our expert opinion.
The current economic climate has disrupted the 2021 housing market.
The trend of strong activity in the housing market continued during the summer with a change in the production of real estate credit. Tensions have been created in many property markets as supply is much lower than demand. Sellers are in a strong position, reducing the room for negotiation on prices.
The rise in prices is added to the difficult context affecting the jobs and housing of the French. In order to be able to acquire housing despite the circumstances, they have access to credit and can count on an advantageous property rate. They are tending to increase the average repayment period of their loans (around 235 months, i.e. 9 more than a year ago). To obtain a loan, borrowers are taking advantage of very good financing conditions with historically low rates. Compared to the high point in June 2020, the average interest rate has fallen by 24 basis points (from 1.29% to 1.05%).
In these situations, it is really important to look for the best bank adapted to your project or your profile in order to achieve the best real estate rate.
The current market is very dynamic. Since the end of August 2021, the volume of transactions of old housing has reached 1,208,000 transactions, which corresponds to an increase of 23% over one year. The French are taking the plunge and making their real estate projects a reality thanks to the current fluidity of the market and the implementation of economic and social buffers. The notaries also believe that prices per square metre are stabilising, so it is potentially a good time to buy.
The forecast for 2022 is that prices are not likely to collapse. We are on the way to a good economic recovery with low lending rates, remaining in favour of sellers and investors. Nevertheless, it must be remembered that this Covid period is marked by various doubts, so it will be easier for us to monitor the situation accurately at the beginning of next year.
It is important to note that the Paris property market changes regularly.
The most expensive arrondissement is the 6th with a price of 15 617 €/m². The least expensive arrondissements are the 20th and the 13th with a price of 9,282 €/m² and 9,242 €/m².
The heart of Paris is inevitably more expensive, reaching prices of over €15,000/m².
It all depends on what you want. We cannot recommend the same arrondissements depending on whether you want to live and feel good in a flat or whether you want to invest. The best arrondissements in Paris to live in are not necessarily the best areas to invest in. Property prices in Paris continue to rise and the market is doing well. It is important to select districts where demand is strong. Rental demand and tourist demand are very different.
The current problems in Paris real estate are: strong demand, a stock of homes for sale, slowdowns in the delivery of building permits and a tightening of loan conditions.
The effects are that there are few sellers and few offers, but a lot of demand and buyers, which puts a lot of pressure on the market, with selling prices soaring. There is little or no negotiation, there is strong competition and buyers have to be reactive in prioritising their criteria.
Interest rates are at a historically low level and only a sharp rise could significantly impact demand. Investors are protected from inflation by the indexation of rents to consumer prices and therefore remain attracted to property.
It is important to bear in mind that more than 60% of sellers are looking to sell today in order to buy again tomorrow. The increase in prices can slow down this process with the fear of not finding better than the property sold. This makes price negotiations more difficult at the moment. For this reason, our advice is to have your property appraised! It is essential to have it done by an estate agent in your area who will be able to position the property at the right price in order to facilitate the sale.
At the moment, many homeowners fear a collapse in property prices and are reluctant to sell, but what we are seeing is a market that is resisting the crisis and, for the time being, there is no sign of a halt to the rise in prices. Demand is strong while supply is weak, and it is likely that many buyers, frustrated at not being able to realise their project, will review their criteria and finally turn to the old market.
