Friday 12th December 2021
The recent increase in house prices in France has been driven by uncertainty about the future.
Over the past two years house prices in France have risen substantially, by a national average of 6.5% in 2020 and by 6.8% (7.1% in the provinces) in the year to June 2021, according to the French notaires.
The price of apartments has been up by 4.6% (6.7% in the provinces).
In a jolt to historic trends, rural areas have seen the strongest growth, in some departments reaching double digit figures, as buyers jump ship from the metropolis.
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Signs are beginning to emerge of a slowdown in activity, but there is no denying that it has been an unprecedented period in the market.
The graphic below from the notaires shows the change in the housing price index since 2000. The light blue line shows the changes in the index for house in the provinces, outside of the Ile-de-France.
The surge in prices has been triggered by the immutable law of supply and demand, with the former in retreat and the latter in full assault.
Jean-Marc Torrollion, head of the estate agents national association FNAIM, states that the number of properties on the market has reduced by up to 32% in rural areas, whilst demand has increased between 30% and 70%.
According to a recent survey carried out by the market analyst Seloger, 71% of those interviewed were anxious about their future, a concern that was leading owners to delay putting their property on the market.
Contributing to that uncertainty were doubts about the capacity of potential buyers to conclude a sale.
The national statistical office INSEE recently reported that the level of unemployment in France in Q3 2021 stood at 8.1%, up substantially since the start of the Covid crisis, which they consider has removed nearly 1 million jobs from the market.
If owners have been reticent to sell, there have been plenty of buyers, driven by pent-up demand from enforced lockdowns, as well as by those seeking a refuge in a second home in the country.
Savers and investors have also piled into real estate, due to a lack of confidence in the stock market, helped by historically low mortgage interest rates.
According to the notaires, at the end of August the volume of sales over the past twelve months was a record, with 1,208,000 transactions, an increase of 23% on a year.
Much of the increase has been the result of a big increase in sales in rural and coastal areas and smaller towns, but buying fever has also affected some major cities, with many buyers seeking more spacious accommodation and a flat with a balcony or a house with a garden.
Although sales to international buyers have been affected by Covid, enquiries for property on our own portal in 2021 have increased by over 100% compared to 2020.
More recent reports indicate that with such large price increases, with winter drawing in, and Covid once again on the march, the market is starting to come off the boil, with prices in Paris and some other metropolitan areas falling over the past few months, although there is not much sign of that in rural areas.
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