The Effect of COVID-19 on the French Real Estate Market
Due to COVID-19, the french real estate market was truly put to the test over the last year and a half. This market surprisingly continued to thrive and held its weight. Shockingly in 2020, transaction volumes were on the rise and produced a staggering value exceeding more than one million sales giving France one of it’s best growth years in the market in years.
However, for a period of two months things were not as pretty. During the early months of 2020, the real estate market was brought to a standstill due first COVID lockdown. This left the market in a tough place. Property visits were cancelled until further notice. Offices and branches were forced to close and work in remote settings. Most importantly, this resulted in the lack of signing of sales contracts leading to a 75% drop in sales.
As the month of spring of 2020 came to a close we were met with a surprising shift in involvement in the market that changed the entire dynamic of the COVID real estate market. Suddenly this new wave of activity resulted in an increase of approximately 370% of completed signed sales contracts surpassing the projected annual sales transactions by 15%. Unfortunately, the second wave of lockdown taunted a similar massive drop in sales that had occurred just four months earlier. As the fall continued, we began to learn that this time around would be quite different and would result in a very tolerable impact. After the first lockdown, companies learned to adapt and began to incorporate digital tools in their daily operations to maximize functionality and sales. Only approximately 10% of projected business was not completed.
From the beginning of September 2020 until March of this year, it was reported that there was a drop of approximately 2.5% in prices across all of Paris. Paris and Lyon are the two most affected cities in all of France. Numerous other largely populated cities in France have reported similar numbers and observe this shift in activity in the market. This recent decline in prices can be attributed to the progressive dwindling of demand in the market over the last six months. The weariness of families was and continues to be partially evident due to uncertainty of the true end of this pandemic. However, the French government has been quick to continue limiting the functionality of the country and it’s markets even though this pandemic has proven to be prolonged and will continue to do so.
As summer approaches, a normally active and strong season for real estate, this market will bounce back from this trivial decrease. Activity in the market should be fairly steady at quite high levels over the next few months and will continue to exceed projections. This can be attributed to the increase in household savings since 2020 due to the lack of loans during COVID as well as the rising numbers of vaccines being spread throughout France providing a sense of safety to the public and transition back to normal life.