The prolonged confinement has consequences for the real estate market, which has flourished in recent years. It could also make city dwellers want to stay cloistered in their apartment.
“We had an offer to sell our house, the buyers had to give us a final answer at the end of the weekend. The announcement of confinement by Emmanuel Macron stopped them net.” Colette * saw the sale of her property in the western suburbs of Paris capsize because of the coronavirus. Since then, the sales process has stalled and no visit has been made. If she is not worried about the future sale of her house, Colette is preparing “at the idea of selling it cheaper than expected”.
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The health crisis is not without consequences for the real estate sector. So far flourishing, in line with a very good 2019 for industry players, the market is coughing, since the virus is shaking society and the economy. The forecast for 2020 is not good. Questioned by Les Echos (article available to subscribers) the president of the MeilleurAgents site, Sébastien de Lafond, anticipates a 25% drop in sales volume, i.e. 700,000 to 800,000 fewer transactions in 2020.
In football, going green is synonymous with entrenchment in a quiet hotel, far from temptations, for the players and the staff, on the eve of an important match. This need for greenery is felt among some residents of Paris and major cities. “We get a lot of calls from people who want to go green”, confirms Mélanie Naives, director of the Stéphane Plaza agency in Melun (Seine-et-Marne). “Some Parisians have understood that for the price of an apartment, they can have a house with an exterior.”
“Lhe goods we offer in the provinces, even of modest quality, have aroused the interest of potential buyers in recent weeks “, confirms Jacques *, director of an independent agency in the Paris suburbs.
For some goods, we currently receive up to two calls per day, while before containment they received little attention.at franceinfo
This trend is also directly reflected in the research of potential buyers. “The property listing site Bien’ici recorded, during the first half of April compared to the first half of March, an increase of 43% in the number of requests from buyers or candidate tenants checking their criteria, the presence of an outdoor space, terrace or garden “, reports The world. The SeLoger Group shares the observation: “60 to 65% of searches relate to houses for sale with garden, against 35 to 40% on apartments, where the ratio was 50-50 before confinement”, explains Michel Lechenault, editorial manager of the brand, in The echoes.
The truth of today is not necessarily that of tomorrow and this call of nature will not necessarily translate into a massive urban exodus. “Will this crisis permanently change mentalities? It will take a little more perspective to see a real evolution “, is wary of a notary from the Paris region.
More than the attraction of individual housing, I detect a rejection of the collective.at franceinfo
The attractiveness of the house with garden remains “unmistakable”, But “is made inaccessible by the lack of land use planning”, adds Michel Mouillart, professor of economics and real estate specialist. “The public authorities have redeployed the means of housing intervention in favor of metropolitan areas, to the detriment of other areas, details the economist. This strategy was accompanied by the closure of schools, post offices … A large part of the territories of the Republic are abandoned. “
The development of telework, which concerned only 3% of employees, and now affects 30% (and up to 50% of executives only), according to The world, however, could have a real impact. “Its generalization could encourage some buyers to take the plunge and consider settling outside the great crown for a house and land “, according to a real estate agent in the Paris region.
Residential investment depends mainly on three factors: household disposable income, unemployment rate and cost of borrowing. While a recession is looming, the first will probably not increase and the second has experienced its largest increase (7.1%) in the month of March since 1996. The curve of the third is therefore scrutinized and, with it, bank behavior. “I am very afraid of their attitude, I am afraid that they will crash the market”, dreads Thierry Delesalle, co-president of the Notarial Institute of Real Estate Law. The notary is concerned that the banks will raise interest rates by “shamelessly”, which could dissuade future buyers. There are already a few lost files because banks “increased their rate by more than 50 cents”, even though notarial activity has been considerably slowed down.
Normally, 15,000 acts are signed per day at this time of the year. Currently, we are barely 3,000.at franceinfo
The fear of an increase in interest rates, which would deepen debt, appears as the first data reflecting the impact of the Covid-19 on mortgage loans have been published. Their number fell by almost 14% in March, compared to the same month of the previous year, according to a study by the Housing Credit Observatory. As confinement was not introduced until mid-March to last until May 11, the fall is likely to worsen.
The recommendations of the High Council for Financial Stability (HCSF) also raise fears of a restriction on access to property. The authority already advocated, in December 2019, better control of the household debt ratio, or “effort rate”, which should not exceed 33% of the borrower’s net income, as well as a limitation to 25 years of the duration of the credits. The HCSF noted that the effort rate sometimes exceeded this threshold and that 5% of the credits granted spanned more than 25 years.
These recommendations were to block the purchase of at least 100,000 households, argued in February the economist Michel Mouillart, at Parisian. The current crisis could inflate this figure. “100,000 households will no longer be excluded by 2021 access to mortgage loans but 220,000 households, three-quarters of which are first-time buyers “, he says everyday. “Now, they are the ones who will want to buy when the happy days return”, he analyzes.
Faced with these concerns, the banking sector is reassuring. “I do not believe that rates will soar, says Paul *, a banker in Burgundy, because they take into account inflation which, for the moment, is not increasing. “ For the moment, the average interest rate remains low, at 1.16% in mid-April, against 1.14% in March, according to the Housing Credit Observatory. It should remain so with the maintenance of the accommodative policy of the European Central Bank (ECB), writes The Parisian. “This posture was reinforced with the onset of the crisis, notes the banker, it is doing everything it can to avoid a cash flow problem. “ Paul also does not imagine the banks letting go of future buyers: “They are cautious, but will continue to lend. Banks continue to consider mortgage lending as central to their relationships with retail customers.”
What will the market bring together when the containment ends? Jacques, the director of a real estate agency in the Paris region, “do not believe that the real estate market will collapse as in 2008 at the time of the subprime crisis “. He rather anticipates “a simple shift of real estate projects, for sale or purchase”. “We have suspended the signing of the mandates, it will intervene when the confinement is lifted. The sellers before the confinement still seem, at the present time, to wish to sell”, he observes.
The number of sellers could even increase, says Thierry Delesalle. “Entrepreneurs may need to sell real estate assets to bail out their businesses”, envisions the notary, who also lists “divorces, separations, deaths or those who simply want to change their accommodation”. On the other side of the chessboard, confidence, the primary criterion that triggers the purchase, will depend on the behavior of future buyers.
The confidence index will take a hit, but this criterion can be offset by the need for security, protection or by the search for a better quality of life.at franceinfo
However, we should expect a decline in the real purchasing power of households. The study published Wednesday, April 22 by the specialized site The Green Notebooks of the economy suggests that it “could fall by 5 to 10%, a drop which is comparable or slightly greater than that observed in 2008”.
On the other hand, those who bet on a significant drop in prices could be disillusioned. It is still too early to anticipate it. Some, however, do not hesitate to bet on the fear of sellers of not being able to find a buyer and try to play poker. “A person made an offer for a house 40% below the price, breath Jacques, I don’t even know if we answered him. ”
“Perhaps for some time there will be no desire to buy, but there are goods on the market at reasonable prices, says Paul. If you are confident enough in your professional future, you are right to buy. ” Especially since the adage on real estate investment remains relevant. “The stock market has gone through difficult times with the crisis, concludes Mélanie Naives, so at these times, real estate remains a safe bet in the eyes of people. “
* The first name has been changed
