Despite a year 2020 marked by the Covid-19 pandemic and containment measures, the market has held up well, even if there are some signs of a slowdown. Lending conditions, house price trends and interest rates: what are the initial trends for the existing property market in 2021?
More flexible lending conditions
Since 2017, much of the sector's growth has been due, not to low rates, but to fairly flexible lending conditions, with banks not hesitating to lend beyond recommended debt ratios.
However, at the end of 2019, recommendations from the French High Council for Financial Stability (HCSF) put the brakes on these practices, requiring compliance with strict conditions: a maximum effort ratio of 33%, and loans not exceeding a 25-year term.
Refusals to grant credit increased significantly, before the regulators decided to relax their recommendations once again, which should enable many households to benefit from a home loan.
Borrowing rates are also set to remain very low. In 2020, they averaged 1.20%, according to the Observatoire Crédit logement/CSA, this average being calculated taking all loan terms into account.
Conditions are therefore quite favorable, but there's a dark shadow hanging over the picture: when government measures to support the economy come to an end, unemployment is likely to rise sharply, with a wave of bankruptcies threatening household solvency.
Towards price stabilization
At present, the trend is for prices in older properties to stabilize, albeit with significant differences from city to city. In Paris, prices rose by just 1.8% in 2020, compared with 8% in 2019. In the last quarter of 2020, they even fell slightly, by between -0.5% and -0.7%. While experts thought the 11,000 euros per m² mark would be passed in summer 2020, the average price was 10,402 euros per m² on January 1, 2021.
By contrast, in Strasbourg, Lille and Nantes, for example, prices are tending to rise. In Marseille, prices rose by 17.7% in 2020, and Lyon also saw strong increases in 3 arrondissements, the 5th (+18.32%), 7th (+11.78%) and 9th (+10.79%).
French people, confined for weeks on end in 2020, are craving more space than ever, both indoors and out. According to a study by digital real estate agency Liberkeys, 50% of French people wishing to move would like to settle in the countryside, compared with 38% in medium-sized towns and only 12% in large cities.
However, households remain dependent on the availability of jobs to fulfill their desire for mobility, which delays projects. Thanks to the spread of telecommuting, some of them have chosen to acquire a second home, which is no longer a secondary residence, but a "semi-main" residence: the time spent in each of the living areas is roughly equivalent, and allows them to telecommute or to be present at their place of work a few days a week, depending on their needs.