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France : the real estate market is resilient

France : the real estate market is resilient

On January 13, President TORROLLION of FNAIM (National Federation of Real Estate) held his press conference on the 2020 situation of the French real estate market. We were present, following here are the highlights.

2020 : the situation in France

The year 2020 was very nuanced, with a less sustained market at the start of the year compared to the end of 2019. Then there was a total stop with the lockdown from March to April. A real rebound in sales occurred from May until September. Once again, we observed a drop in activity with the 2nd lockdown in October and the ban on showing property. Then at the end of the year the restart was there but a little soft.

In 2020, the French housing market was nevertheless resilient with a declining volume of transactions but very close to one million of sales. Prices  are resisting, still supported by the very low level of interest rates.

There is a slight territorial rebalancing, with a less dynamic market in the most expensive cities.

There are some uncertainties about 2021 during which the development of the employment market and the expected gradual recovery of the economy will have to be closely monitored.

A high level of sales

FNAIM estimates that home sales fell by around 8% in 2020 (85,000 fewer sales than in 2019), to 980,000 sales. That is a level very close (and even slightly higher than that) of the years 2017 and 2018.

The drop inthe number of home sales is more marked in Paris (- 17%) than in the otherFrench regions (-5%). Prices (in whole of France) increased by 4% to reach an average level of 2,807 € / m2. This is an increase of almost 10% in prices since 2018.

It is within the Paris city limits that prices have increased the most since 2010 (+ 59.8%). The average for France as a whole is + 21.4%

Regional disparities

The strongest price increase among large metropolitan areas is observed Rennes (+ 7.4%) followed by Orléans (+ 5.7%) and Nantes (+ 5%). Bordeaux saw its prices settle down in 2020 (+ 0.2%). The other large cities stand with price increases of around 3-4%. Lyon (+ 1.5%) and Marseille (+ 1.8%) saw their prices stabilize.

At the end of 2020, with a budget of € 160,000 (median price), the purchasable surface area is very disparate, ranging from 15 m2 in Paris, 37 m2 in Lyon, 47 m2 in Lille, 65 m2 in Marseille and 73 m2 in Dijon.

The rental yield for a residential investment is also very disparate. The gross profitability is around 3.59% in Paris, 4.17% in Lyon, 5.59% in Lille, 6.97% in Marseille. It would be more advantageous in terms of living space, to rent in Paris, Bordeaux or Lyon, while buying would be more advantageous in Orléans, Rouen or Marseille.

The average term of mortgage loans has exceeded 21 years, in order to support the rise in prices that the low level of rates alone cannot compensate. Especially since there is a slight increase in the rates of 11 basis points between the end of 2019 and October 2020. The duration should however stabilize in line with the recommendations of the HCSF (High Council for Financial Stability).

According to Jean-Marc TORROLLION, “In these troubled times, real estate is confirmed as a safe haven for the French. Despite the lockdowns and the uncertain economic situation, real estate appears to be a reliable and lasting investment. “

Translated from french by Agnès Scott



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