Record, did you say record? Despite a slight downturn in sales since the end of the summer, 2021 will certainly remain a banner year. Specialists expect a record real estate sales volume for this year, that is to say, more than 1,200,000 real estate transactions for the year 2021. The latest record to date, that of 2019, was already remarkable with 1.067 million real estate transactions. Why such numbers? But because people still want to invest in stone, of course!
First of all, it is due to the simple but unavoidable observation that in the event of confinement, it is better to feel at home. The bad experience of some in 2019 during the first period of confinement led many people to invest in luxury properties around the world in order to buy a new home in which it is good to live. In fact, these are more old houses than apartments, which is understandable in order to be able to ventilate without constraints and thus enjoy a little green space. The sword of Damocles represented by the different variants only reinforced this desire for elsewhere and for the better.
In addition, the attractiveness linked to the still very low-interest rates favored this record volume of real estate transactions. In July 2021, the average interest rate on new home loans was still 1.05%. And it is not the latest recommendations of the HCSF (“High Council for Financial Stability”) that have changed the situation.
In addition, the standardization of teleworking for many employees refers to this notion of comfort. Telecommuting requires more space and is much easier in a house than in an apartment. Home sweet home, even at work you might say!
“The safe haven, very low rates, teleworking, the need for space and greenery, and the remote signing of notarial deeds have enabled the market to hold up well.”
Old houses are popular
The volume of second-hand housing transactions exceeded 990,000 sales in 2020, and These are also exceptional numbers since this “feat” has not happened that often. Indeed, the 900,000 sales mark was only reached or exceeded in 2017, 2018, 2019, and 2020. We can bet that the London appetite for buying old houses will be confirmed in 2022.
In Paris, for example, the old house market has indeed benefited from increased attractiveness between 2020 and 2021, with sales volume growth of around 8%, mainly attributable to the Greater Crown ( + 13%). However, the volume of sales of old apartments also grew by 5% in Petite and Grande Couronne (sources “Chambre des Notaires de Paris”).
This search for investment in the old, whether for an apartment or a house, continues in 2021. This is confirmed by the conjuncture note of the Notaries of France of July 15, announcing an impressive number of 1,130,000 transactions in the former at the national level, over a period of twelve months (as of May 31, 2021).
Real estate trends for 2022
If we refer to the latest statistical data published in early October, economic growth should still be significant in 2022, and inflation should continue to post a level higher than the underlying inflation observed before. the health crisis linked to COVID-19.
Clearly, these two essential factors could justify a slight but certain increase in mortgage rates. We cannot sustainably continue to borrow with mortgage rates so low and, what is more, lower than inflation. This could be at the origin of a powerful rise in property prices … when they do not (a priori) need it!
In addition, with the modification and tightening of the rules for granting real estate credit, formalized by this publication of the Official Journal n ° 237 of October 10, 2021, we can expect a drop in the activity of real estate transactions, in the continuity of that, started in the summer of 2021. In addition, it seems quite reasonable to think that an increase in mortgage rates, associated with the more rigorous debt standards imposed by the HCSF, is at the origin of a slight drop in property prices in the short term (or at least a sharp slowdown in their increase), and probably for the start of 2022.
However, keep in mind that the game of forecasting real estate trends, just like forecasting the weather, is not really an exact science! Our experts will keep a close eye for you on the development of the real estate market in 2022.