A sunny summer for the property market

Activity almost at a standstill and fears for the future: the first half of 2020 is unprecedented for the property market as for everyone. So much so that we are observing the effects of lockdown easing without having truly predicted them. Several pieces of good news brighten this start of summer: the recovery so hoped for has indeed taken place, all players confirm it. And interest rates remain at a historically low rate. Explanations.

A recovery at full tilt

The post-lockdown effect is certainly there: the transaction volume for June 2020 is 35% higher than for the same month in 2019, as highlighted by newspaper Les Echos. While this should not be seen as a tremendous lasting leap, it remains nonetheless excellent news. The LPI-Se Loger barometer for its part announces an increase in property values at the end of May of +4.7% for flats and +5.6% for houses, representing an overall average increase of 5.1% annually.

The progression must be nuanced as many projects that remained on hold during lockdown suddenly materialised. The seasonality of the market makes spring months a pivotal period for a September move-in, so it stands to reason that transactions crowd in as soon as activity resumes. But everything suggests that the pause in health crisis activity has merely delayed property activity, without any lasting negative effect on confidence or prices.

Diverse motivations

The numerous purchase projects recorded within property networks are, in part, motivated by the desire to get back to the countryside linked to lockdown: some assets have realised that remote working allows them to consider a new life project in the country while keeping their professional activity intact but adapted.

The search also focuses on criteria of larger surface area and the presence of outdoor space. A new consequence of lockdown sometimes badly experienced in cramped housing.

Finally, the desire to access property ownership seems to have strengthened, particularly among first-time buyers.

An encouragement from the banks

The increase in mortgage interest rates observed during lockdown has not been confirmed. According to a note from the Bank of France, it appears that the rise effect is essentially due to the larger share of loan renegotiations in spring, in relation to new loans having become rarer than usual. New transactions signed since have been at a very low rate.

It should be noted that, on the other hand, banks remain cautious and select the dossiers to which they lend more drastically. Existing clients and very good dossiers are preferred, and benefit from more attractive rates.

While the property market seems to want to catch up on the delay linked to lockdown, it is advisable to remain cautious and maintain the effort. It would be beneficial to relax the recommended criteria for dossier selection and implement measures encouraging recovery: extending zero-rate loans in the older stock and restoring accession APL in mainland France, for example. Given the seasonality of the market, the three summer months will be decisive: to be followed.