Containment: what consequences for the real estate market?

What if containment had changed the real estate game positively?.

The year 2020 has been a trying one for a large majority of French people. If it is known to all that the health crisis had a direct impact on the country's economy, this unprecedented episode also had a real role to play on the state of the real estate market. Several months into 2021, the real estate trends associated with this particular period are beginning to emerge clearly and point to real changes in both new buying, selling and renting habits.

It has to be said that the new ways of working experienced during the various confinements have not helped. In particular, the government's encouragement of teleworking has been a key decision factor in the transformation of the current property market.

The result: the property market has changed in record time!

While some fear that these changes have been too quick, it has to be said that the current property market is more buoyant and interesting than ever. The diversity of available offers and the real estate searches geographically more focused on the comfort of daily life offer new possibilities of acquisition or sale.

In fact, it is on the point of the environment that the Côte d'Azur has been able to pull out all the stops. Already prized by buyers and investors, the Var has notably reinforced its power of attraction thanks to offers close to the ideal sought after by many city dwellers in search of a new primary or secondary residence.

But then, what are the developments noted and how can you take advantage of this period to invest, buy or rent? A specialist estate agency based in the heart of the Golfe de Saint-Tropez in Port-Grimaud, Logi-Service details all the consequences of the confinement on the property market to help you see it more clearly and help you get started.

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The older homes market is still going strong

Renovated older homes have been the most sought-after properties for buyers for many years and this is now confirmed!

Despite the economic and social situation linked to the pandemic, the old house market has therefore been able to resist by maintaining itself at a good level. The first quarter of 2021 proves this as it shows that the number of transactions of old properties continues at a rather steady pace. This clear trend allows the old property market to remain as interesting for both sellers and buyers since offers are regular and attractive.

While the uncertainties linked to the crisis have somewhat slowed down the new-build market, older homes have therefore confirmed their success, particularly for charming, authentic and/or typical regional properties such as fishermen's houses or Provençal villas, which are currently highly sought-after by both French and foreign buyers.

New criteria for properties to buy or rent

The successive confinements undergone in recent months have left their mark on both minds and lifestyles.

The desire to get away and enjoy the joys of a calm and soothing environment has become a real issue in real estate as searches have clearly moved towards this point. Whereas previously the appeal of large cities was a real value for buyers and/or future renters who wanted to find accommodation close to their place of work, the telecommuting imposed during confinement has changed this basic search considerably.

Whether it is Parisians, people from Marseille or even people from Lyon and Bordeaux, they are all now looking for homes in line with their new lifestyle. This therefore goes hand in hand with a want for tranquillity and a more serene living environment on a daily basis.

Gone are the cramped city flats: the growing desire today is for more space and comfort in daily life, even if it means moving away from the major metropolises and being located several hours by train or car from the headquarters of one's job.

This trend resulting from confinement should be confirmed in the years to come as a perennial basic movement based on the new possibilities offered by telework.

The appeal of medium-sized towns between sea and countryside

As explained in the point above, the post-confinement property search has changed the property market and opened up new opportunities to a wider public. On the map, certain geographical areas are benefiting from this fundamental movement linked to the transformation of lifestyles.

Among the regions favoured by both French and foreigners: the Côte d'Azur.

Already known for its annual tourist appeal, the Côte d'Azur has today gone from being a holiday destination to a real main or secondary place to live for many city dwellers. If in the Bouches-du-Rhône, Marseille and the area around the Phocaean city are the most targeted corners, in the Var it is notably the Gulf of Saint-Tropez that is increasingly favoured by future buyers or renters.

It must be said that the authentic and typically Provençal charm of this geographical area has enough to satisfy searches focused on the living environment.

Between the sea and the countryside, the Côte d'Azur now offers a wide range of real estate offers for all expectations and all searches. A godsend for following the evolution of the post-confinement property market, which is tending towards a growing interest in medium-sized or even small towns!

In Port-Grimaud in particular, the lakeside town is increasingly sought after for its idyllic waterside living environment. The atypical side of the Provençal Venice with its colourful houses finds a strong echo with the French and foreign public, especially for second homes.

The regions between the sea and the countryside are therefore at the heart of a new key issue in the current property market.

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Attractive interest rates

In recent years, interest rates have proven to be very attractive.

But what about after containment? Good news: interest rates have remained as low as ever for the past year. Since the beginning of 2021, mortgage rates have maintained their very low trend despite the economic situation and the impacts related to the health crisis that could be expected.

The average interest rate broke a record in May 2021 with a rate of 1.07%!*

*according to the latest figures from the Observatoire Crédit Logement CSA

These record low interest rates are perfect for making a purchase but beware, possible inflation in the coming months could change the game. The economic recovery following the year of the Covid-19 Coronavirus crisis could push this rate up soon. It is therefore better to capitalise today to enjoy a very low record rate for your purchase!

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Contrasting purchasing power, sometimes declining but present

The purchasing power of the French has been disrupted because of the crisis.

While prices are maintened, purchasing power is not necessarily at its best everywhere in France and is having difficulty following this trend. It must be said that depending on the town, the disparities linked to purchasing power are significant and are somewhat blocking the current property market.

However, be careful not to draw too hasty conclusions: this observation of the drop in purchasing power is to be qualified by a scattered economic situation encountered by households during the confinement.

And for good reason: when some people found themselves on short-time working for several months during the Covid-19 crisis, others were able to continue working, notably by teleworking. If purchasing power has been contained due to the lack of accessibility to various leisure activities, on the other hand the savings of many French households have considerably increased.

The Banque de France's Eco Notebook published on 3 March 2021, moreover, communicates clear statistics on this subject.

The amount saved by the French in the second quarter of 2020 reached a record 27%.
This represents almost 3 times the amount saved in 2019!**

**according to the note de conjoncture of the Institut national de la statistique et des études économiques (INSEE) of 6 October 2020

The priority of many French people has therefore been put into savings. The latter can therefore be considered today as an interesting investment to make a property purchase in 2021, despite an often decreasing purchasing power.

Moreover, the economic recovery is still likely to change the situation positively since purchasing power could rise again throughout France thanks in particular to the revitalisation of the employment market. To be continued...

The boom in second homes continues

It's no longer a secret: second homes are on a roll more than ever!

After the confinement the trend is confirmed with nearly 3.5 million second homes counted in France in 2020. While some people want to move away from the big cities right now by changing their daily work habits, other inhabitants want to keep their homes in the big cities for the time being while reserving an option to "go green" through the acquisition of a second home.

Second homes are indeed ideal opportunities for many homeowners who wish to afford a pied-à-terre close to a pleasant environment for weekends and holidays for example.

In terms of secondary residences, the Gulf of Saint-Tropez is particularly favoured due to its location on the Mediterranean. Many secondary residences are therefore sold today to metropolitan, European or international investors who wish to offer themselves a space where they can come and recharge their batteries during their days off.

However, although second homes are increasingly numerous, particularly on the Côte d'Azur, the acquisition of a main residence also remains a safe haven on the post-confinement property market.

And for good reason: the containment episodes have had an impact on tenants. According to the latest trends, the latter may well jump ship and buy their first property in the region. The market for primary residences therefore remains rather stable and is of particular interest to first-time buyers ready to buy a property that they can customise as they wish and in which they will really feel at home.

The impact of digital on real estate

While the health crisis has allowed us to observe an evolution in terms of searches or even the location of properties, the modes of acquisition and contact have also been modified.

The first containment of March 2020 demonstrated theimportance of digital and digital dematerialisation of media in the real estate business. Whether it is notarial deeds, real estate documents with electronic signatures or virtual visits, digital tools have played a predominant role in the evolution of the market by changing the habits of professionals in the sector.

Practical and accessible to a large number of people without distance constraints, digital has therefore made it possible to make a stalled property market more fluid. Better still, digital still plays a real role in the housing chain to this day.

Although most real estate professionals have already been used to using digital tools for several years, including social networks, the Covid-19 crisis and containment have further accentuated these digital uses within real estate agencies. Email exchanges, remote guided tours, video conferencing... A wide range of digital options are now available to enable potential buyers to find out more about a property without having to go anywhere!

Of course, digital is not intended to replace the indispensable human contact in real estate. It is simply an additional solution to accompany the purchase, sale or rental whatever the conditions. A bonus for the current real estate market, which should undoubtedly continue to exploit the possibilities of digital tools in the years to come.

As you will have realised, while the post-confinement property market is still rather uncertain at this point, major trends are already emerging to predict the main thrusts of tomorrow's property.

Geographic sectors, new search criteria, types of property targeted, new interest rates... one thing is certain, containment has changed the habits of the sector!

And while the resumption of "normal" working life will probably define more precisely the real developments in real estate between now and the beginning of 2022, it is important whatever happens to entrust your project to a real estate professional. They will be able to help you and give you personalised advice on your project, as they are constantly monitoring the market.

Buy, sell, rent, call on an expert to make your real estate project a reality.

Logi-Service installed in the lake city of Port-Grimaud offers you its expertise to find your future house, villa or flat on the French Riviera. Main or secondary residence, we propose you numerous real estate sales offers in the Gulf of Saint Tropez and in Port Grimaud.

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