What does the end of confinement mean for the French property market?
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With lockdown restrictions having been eased in France, here’s how things are currently looking for buyers and sellers.
Estate agents are open again: The first phase of deconfinement in France, which began on Monday 11 May, means that several lockdown restrictions have been relaxed for an initial period of three weeks across the country (although ‘red’ departments in the northeast will see fewer restrictions lifted). One of the relaxed measures is the reopening of most shops, and this of course includes estate agents but also extends to the notarires, banks and other organisations involved in the property market. Travel of up to 100km from your house is also permitted. This is welcome news for buyers and sellers already living in France, but for those living in the UK, for example, signings and exchanges of documentation continues to take place digitally.
Mortgage rates remain stable: Over the past couple of years the French property parket has soared, partly due to extremely low mortgage rates. While Covid-19 and the confinement have undoubtedly had an impact on the wider economy, real estate specialist SeLoger finds that mortgage rates remain below 1.4%, with an average of 1.17%. According to SeLoger,in April 2020 mortgage rates stood at an average of 0.96% for a 15 year duration, 1.13% for 20 years, and 1.38% for 25 years. Loan terms in April averaged 231 months, a stable figure for this year.
While mortgage rates remain relatively low, however, grant conditions have tightened and 25% fewer loans were granted from February to April of this year compares to the same time last year, SeLoger finds. In line with this tightening of conditions, the number of borrowers with the least personal contribution has also fallen.
Buyers are seeking more rural areas: One of the effects of the confinement is that people have an increased appreciation for the value of outdoor space and fresh air. This, and the increased ability to work remotely, may contribute to the fact that more and more people are seeking rural or suburban properties, rather than those in cities or large towns. “We can imagine an effect of urban exodus, people leaving the intramural of large metropolises,” said Thomas Venturini of Paris estate agency Liberkeys, when speaking to SeLoger.
Alpine and ski property has fared well: While the majority of the property market has seen a fall or even a pause in sales during the confinement, some micro-markets such as French ski resorts have fared well, according to property investment experts Athena Advisers. Ski resorts are in the position of consistently having low supply and strong demand, and timelines have not been majorly disrupted as for the most part construction of new developments has gone ahead as planned. Athena Advisers has also seen that though investment enquiries have dropped significantly during the confinement, many investors have spent more time gathering information at home in preparation to make a purchase - the number of people viewing French Alpine property webinars increased by 163% in April 2020.
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