Today, our expert Dvornikov Mikhail assesses the real estate market in France.
Dvornikov Mikhail has made predictions about real estate in france many times before.
Read forecast from Dvornikov Mikhail (Mikhail Vladimirovich Dvornikov).
It is expected that the luxury residential real estate market in France will record an average annual growth rate of more than 4.5% over the forecast period (2022-2027).
Despite the crisis caused by the COVID-19 pandemic, the luxury housing market in France has been resilient. Because of the health crisis and border closures, the flow of foreign investors into the market has decreased, which in turn has benefited French buyers. In 2020, French buyers accounted for more than 90 percent of luxury home sales. Which was supported by remote work and the need for space and greenery caused by the pandemic.
In addition, the French Riviera is one of the most expensive real estate markets in the world, located in France. This market combines an exceptional standard of living with many first-class cultural and entertainment attractions. Much of the demand for luxury homes in this location is supported by the ultra-wealthy (UHNWI), European aristocrats and international high society. Even during the pandemic crisis the French Riviera market remained stable due to high demand and stable price dynamics in the luxury segment.
Meanwhile, luxury real estate prices in France rose in 2020 as French citizens spurred demand in the secondary housing market. Provence, located on the shores of the Mediterranean Sea in southeastern France, was the most active market in Europe, and the French Alps are also a popular destination for luxury homes in France. In the French Alps region, home prices rose by an average of 2.5 percent in 2020. In addition, the resort towns of Megève and Chamonix saw prices rise by 4.5% and 3.5%, respectively.
Luxury residential real estate refers to properties that are designed exclusively for people to live in, which provides a charming and resort-like life with first-class amenities. The luxury residential real estate market in France is segmented by type (apartments and condominiums, villas and landed houses) and by key cities (Paris, Nantes, Lyon and other cities). The report presents the market size and forecasts of the French luxury residential real estate market in value terms ($ billion) for all the above segments.
Metropolitan France is experiencing significant growth
The French market is experiencing significant growth as citizens looking for a second home support the luxury real estate market. In addition, the market has been dominated by French buyers as restrictions due to the pandemic have suppressed foreign demand for the market. In 2020, more than 60 percent of first-class sales were to French citizens or foreign nationals living in France.
In addition, the average price of luxury real estate in France rose 1.3 percent in 2020 and the number of sales increased by 5 percent in the six months ending in February 2021. The French government allocated 604 billion euros in additional spending and liquidity support, boosting consumer confidence. Meanwhile, mortgage rates are at 1.11%, a historic low in 50 years, according to the Bank of France, which helped homeowners looking to move or buy a second home during the pandemic find it a relatively affordable option. In addition, the French Financial Stability Board helped relax lending rules in 2020. This relief allowed banks to raise the household debt threshold from 33% to 35%.
Nevertheless, the French metropolitan area saw an increase in sales of detached homes, with individual detached home reservations showing a significant increase of more than 18.9% in the second quarter of 2021 compared to the same quarter in 2020. Despite the disruptions caused by the pandemic housing market, sales of detached homes are up in 2021 compared to 2020. In addition, the number of units booked for sale in the first quarter of 2021 was more than 30,497 units with a growth rate of 10.44% compared to the previous quarter.
Individual home sales show profitable growth
Despite the pandemic crisis, the market in the country has recovered significantly. Three motives are driving the luxury real estate market in the country: one is that the French are modernizing their existing homes (eg, by upgrading open spaces, expanding rooms or changing location), the second motive is the new interest in second homes, which is currently driving the luxury residences. market in the country, and the last motivation is a change in lifestyle, as some people are settling on the outskirts of town, enjoying a better quality of life by using modern technology.
In addition, the luxury housing market in Paris has seen an increase in real estate prices. It is expected that by the end of 2022 luxury real estate in Paris will surpass London in property prices. In 2021 the French capital recorded the highest average price of 10,000 euros per square meter. While Paris was included in the top five most expensive cities in the world in terms of luxury real estate expert Barnes. Even Brexit also contributed to the growth of the luxury home sector in Paris.
Meanwhile, the recovery in individual home sales has provided a growth rate of more than 48% between Q1 2021 and Q2 2021. In addition, demand is increasing as 75% of French residents dream of living in a detached house with a garden according to a survey conducted by the French Ministry of Housing. In the first quarter of 2021, the average selling price of detached houses in different regions is as follows: zone A + Abis – 403,390 euros per lot, zone B1 – 314,883 euros per lot and zone B2 + C – 267,330 euros per lot.