[Article partenaire] The health crisis quickly turned into an economic crisis, devastating many sectors. What about real estate? Will he experience any changes following this crisis situation? Are the prices going to fluctuate? Coronavirus and real estate, find out what to expect.
Impact of the coronavirus on real estate in 2020 and outlook for 2021
While the French real estate sector was on the rise in 2019, with more than a million transactions completed, 2020 did not follow the same trend. Despite a very promising start to the year (with an increase of + 7% compared to the start of 2019), the sector has not escaped the impact of the Covid-19 crisis. Faced with the two confinements experienced by France, the tightening of borrowing conditions, the reluctance of households and the closure of real estate agencies, transactions have decreased considerably, with a drop of 11.1% according to SeLoger, at a pace rolling quarterly.
On the contrary, real estate prices continued to increase overall, with an increase of + 6.3% over one year at the end of November 2020, according to the SeLoger barometer. However, in some large cities, such as Paris, Lille, Toulouse, Nice or Bordeaux, prices have shown a much smaller increase since this summer, or even a very slight drop. In Paris for example, prices show a very slight increase of only + 0.7% between August and December 2020.
According to the Meilleuragents.com national barometer of December 1, 2020, real estate prices increased by + 0.2% in November at the national level.
We can therefore envisage that this trend will continue in 2021, even if this is still difficult to confirm, in particular following the reduction in the second confinement, which could help to boost the market again.
Resumption of real estate visits
While real estate agents have been unable to show homes since the end of October 2020, this ban was recently lifted. Since November 28, the second confinement that France has experienced has been easing, allowing the French to visit housing, whether for a sale or rental project.
However, you should know that only visits to properties that are intended to be inhabited as main residence are authorized. French people who are looking for a second home will therefore have to arm themselves with a little patience before starting their search. Several health measures are also to be taken into account during property visits (a maximum of two visits per day and per property, with only one customer at a time…).
Real estate: more than ever a safe haven
Whatever the impact of this crisis, owning a property in unstable times can be interesting because it generates additional income. And, whatever the situation, housing is a primary need.
Uncertainty drives people to want to put their money in more secure investments, such as gold or real estate. For the French, investing in stone is safe and profitable! This principle is reinforced in times of crisis, especially the international health crisis we are going through.
The term “safe haven” was created to denote gold, because gold was bought in times of crisis or inflation. In the years 1960-1970, there was high inflation; and, to minimize the loss of purchasing power, the French have invested in real estate. Today, qualifying real estate as a safe bet is done because the stone prevents a loss of value.
In addition, loan conditions are becoming more and more favorable. While rates had risen in March, November marked a drop in mortgage loans ranging from -0.05 to -0.45%. Average rates at the end of November 2020 were then 1.05% over 15 years and 1.25% over 20 years.
The coronavirus has also had an effect on virtual tours. According to a digital real estate agency, they have multiplied by 2.5.
However, the construction and renovation sector may experience a negative economic impact. If this is the case, it would be more interesting to turn to old real estate, ready to rent, rather than new, in order to put the property up for rent quickly.
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