NEW LOCKDOWN MEASURES: WHAT IMPACT ON REAL ESTATE?
1 November 2020
NEW LOCKDOWN MEASURES: WHAT IMPACT ON REAL ESTATE?
Just a few months after the first lockdown, the national economy has since late October 2020 been running at best on two cylinders. How has the real estate market reacted to this second wave?
New lockdown measures and the real estate market
The property boom observed over the past five years hit a brick wall when the first lockdown measures were imposed in the first half of 2020. A summer period seemed to promise better days ahead, but the verdict fell at the end of October. France was once again in lockdown, and the real estate market was no exception. So, what’s the state of play and what can be expected in the weeks and months ahead?
A go-slow market2019 seems so close and yet so far away. Transactions just a year ago surpassed the record one million number. It goes without saying that 2020 will not, no matter what, get anywhere near this magic tally. It is still today far too early to predict, but the volume of some 900,000 transactions which were foreseen after the first lockdown will, in all likelihood, not be reached. Highly unlikely indeed, for real estate agencies were closed to the public on October 29th 2020.
Some however took the opportunity to develop or perfect their digital presence: virtual tours, distanced advice, videoconferences etc. But despite any progress that was made, the results have been understandably extremely limited: an infinitely small number of buyers are ready to take a decision based just on a video. The only projects that moved forward during the second lockdown were already pretty well advanced before the first.
Major cities are sufferingA trend that took shape after the first lockdown seems to persist. In Paris, "For sale" signs are popping up on facades and balconies, whereas in 2019 apartments were often sold before they even officially arrived on the market.
In October, on a national level prices stabilized with a very slight 0.2% increase. The country’s largest cities however experienced a downward trend: Paris (-0.6%), Toulouse (-0.7%), Bordeaux (-0.7%) Lyon (-0.3%). Major companies associated with these cities suffered from lockdown which has added a significant dose of uncertainty.
The ITI which measures the balance between the number of buyers and the number of sellers in a given area makes it clear that while there were previously 20% more buyers than sellers, this has declined significantly. Today, across densely inhabited urban areas, it is believed that this has rebalanced with an equal number of buyers and sellers. A change that has (and will have) repercussions on prices.
Demand has been delivered an uppercut
The probable post-Covid employment situation will obviously not be favorable for real estate projects. Buying a property is an important and carefully thought-out act, and a minimum vision of a more or less near future is essential. Economic uncertainty significantly dampens the desire to acquire property, and uncertainty regarding health, still present today, obviously makes matters worse. A first lockdown, a second… and who can say how many more? Everyone is thoroughly sick and tired of this seemingly endless nightmare, and with confidence a driving force in real estate all is far from rosy. The last few weeks of the calendar year are in general far from dynamic for investment, and it is unlikely, to say the least, that we can expect anything wonderful from the end of 2020. And any hope of a rebound comparable to the one witnessed after the first lockdown is, sadly, a pipedream.
Case 1: An epidemic with a limited timescale
A paradoxical situation which symbolizes the current situation quite well. Mortgage rates at a very low level, close to historical records for the best candidates.
But faced with what could represent a promise of improvement in the market, the banks tighten the screws and their conditions: a loan period not exceeding 25 years, a debt ratio limited to 33% and at least a 10% down payment. Conditions that are extremely unfavorable for first-time buyers, of whom more than a third (37%) have their loan applications refused.
The Basque Country and lockdown
While it is always possible to draw a general trend across the entire country, it should never be overlooked that each region has its own particularities ... and therefore its own market.
The Basque Country, which has been blossoming for years, has not lost its appeal since the first lockdown. Months of living between four walls led to many expressing the wish to flee the constraints and stress of big cities, and this was not just a flash in the pan. From June onwards, requests for information from agencies multiplied and with a common denominator for the vast majority: a larger property with a terrace or a garden… Working from home is also playing in favour of the region: unthinkable just a few years ago, this option is attracting both employees and business leaders. A whim or a lasting trend? The future will tell.
One thing is certain. The Basque Country, once a market in which the primary research was for a second home, has evolved into a market with an increasing search for main residences. Whatever your real estate project, you can count on the know-how and expertise of our teams to help you to achieve your aim. Côte Ouest Immobilier offers a wide selection of exceptional villas and apartments for sale from the south of the Landes department to the Spanish border.