The real estate market, like many other sectors, has undergone many changes since the health crisis caused by COVID-19.
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The real estate market, like many other sectors, has undergone many changes since the health crisis caused by COVID-19. New trends are often difficult to understand, whether they are professionals in the sector or people planning to buy real estate. To better understand what has happened and what will happen in the real estate market, Jonathan Le Corronc Clady, President of FNAIM Vaucluse, kindly answered our questions.
How did the real estate market behave in 2021?
Last year the market was exceptionally dynamic. Despite the health crisis, the sector has set new records. The volume of transactions in the first one exceeded the mark of 1,200,000. Thus, the record of 2019 was broken, as it is +12% compared to 2019. As for Vaucluse, we had 10,310 housing transactions, i.e. +28% compared to 2020. French enthusiasm has not waned in 2021. , and many of them planned to buy more spacious housing and go green without leaving urban spaces. The attractiveness of real estate rates has also greatly contributed to the growth of the real estate market.
What new real estate trends can be observed and have they been affected by the COVID-19 crisis?
Indeed, at the territorial level, there was a shuffling of cards. Over the past five years, we have moved from a hyper-megacity to a de-metropolis. This shaped the market in such a way that prices peaked in 2021. Houses sold on average 7.7% more expensive than in 2020, while apartment prices rose by 5.6%. When it comes to buying real estate, the big cities are stagnating, and it’s more the mid-sized cities like Avignon that have benefited from this price increase. The same is true for rural areas.
What are the forecasts for 2022 for the real estate market?
The market should still be very buoyant in 2022, although stabilization in terms of home sales is to be expected. At the moment, there is no way to tell if buyer dissatisfaction with large cities will be confirmed in the long term, but at the moment, property searches are still concentrated in medium-sized cities and suburban areas. We will also have to expect an increase in the cost of building new houses and apartments. Moving back to suburban areas like Vaucluse, inventories have dwindled significantly and sales times have been shortened to the point where the risk of not finding your dream property increases. While all forecasts are uncertain, we can hardly imagine that 2022 will be on the same upswing as 2021, both in terms of sales volume and price growth.
What changes can we expect with the entry into force of the climate law?
It is necessary to take into account not only the climate law, but also the evolution of the financing plan and new behaviors. The level of energy efficiency requirements imposed by the new rules will certainly worry real estate investors. Many owners of older homes remain fearful that they will no longer be doing the necessary work due to lack of funds, and this risks leading to a reduction in rental supply in the long run. In terms of the financing plan and its changes, households with the most modest resources are likely to be hit hardest. The Financial Stability Board requires banks to limit mortgage terms to 25 years and up to 35% of the maximum debt ratio, including insurance. Unfortunately, despite the fact that housing is the first item of expenditure for the French, housing remains at the moment the main missing element of the current presidential campaign.
How is FNAIM adapting to the new challenges of 2022?
Initially by supporting our members and their clients as we participate in the vast green condominium refurbishment movement. All FNAIM Property Managers have received the information they need to best support co-owners in this process. We are also going to massively educate real estate agents from the first quarter of 2022 on the future challenges of climate law and its impact on transaction markets. The goal here is for them to be able to send this information to customers. Indeed, our work will be really focused on consultation so that agents can provide information and services that our fellow citizens are entitled to expect.