Real Estate of Tomorrow: 3 Major Changes Ahead

While real estate is one of the most stable sectors, it must nonetheless adapt to our evolving needs. This is how our living spaces have expanded and our kitchens have (often) opened up over the past few decades: housing and its layout reflect our way of life and how we interact with our loved ones. Today, new issues are arising, leading many people to reconsider their perception of their home and take concrete action. Let us examine three changes that appear set to reshape tomorrow’s real estate.

#1 Acquiring More Affordable Property

Property prices in cities are becoming an insurmountable issue for a growing portion of the population, unable to become homeowners in major metropolitan areas. In Paris, over the last year, the average property price increased by 7.3%. Across metropolitan France, INSEE tells us that the housing price index rose by nearly 22% between 2010 and 2020. Many households, whose incomes have not seen such growth, must choose between renting or moving away to find properties elsewhere within their means.

While the Covid-19 pandemic has otherwise encouraged demand for housing in more rural areas, half of the world’s population nonetheless lives in cities today. This phenomenon could persist and even intensify, notably because employment remains largely concentrated in urban areas, as do the best schools and healthcare centres.

Housing must be reconsidered collectively, to offer more affordable solutions while ensuring decent, if not pleasant, living conditions. This requires strong public action, enabling the creation of residential zones in strategic locations and the in-depth renovation of urban space, while developing adequate and quality transport: public transport of course, but also cycle lanes.

These changes are underway, and policies aimed at enabling ownership on a smaller budget focus on a wider range of options and tax incentives such as the intermediate housing scheme, the Pinel law, the “Louer Abordable” scheme, or the Denormandie law for older properties. Buying more cheaply will enable investors to offer more attractive rents, and owner-occupiers to take on less debt.

#2 Adapting Housing to One’s Lifestyle

The second theme relates to how we experience property. Starting with the immediate surroundings of the home: goodbye to the trend of crowding into large soulless co-ownerships or totally concreted neighbourhoods. Today’s balance involves more space, ease of parking, more green spaces, and new constructions are designed with this in mind. But the change continues, with the generalisation of outdoor space in most newly-built collective housing, the greening of many roofs or facades, and generally, the search for a new, more qualitative way of living in (small) urban housing. Housing is no longer seen as a mere functional tool; it is becoming an essential element of life balance and must therefore meet the deep aspirations of its occupants, beyond practical aspects.

Within homes, the health crisis has generated new needs, notably that of having more space for more harmonious family cohousing when lockdown is the norm. Communication between spaces is being reconsidered to allow both richer interactions and individual peace and quiet preserved when needed.

Furthermore, the possibility of installing a home office rather than working at a table corner is gaining importance. Mandatory remote working has enabled companies and workers alike to discover its benefits – the elimination of commute time being the most obvious – and the wish to continue this practice, at least partially, is common. Yet one must be able to work comfortably from home: a dedicated room is ideal, but it incurs additional costs that not everyone can afford.

Not to worry, the solution may be to combine our first two changes. By moving further from work – further from the city – a household will gain in budget without suffering insurmountable inconvenience if remote working becomes the rule two to three days per week.

#3 Acting Against Climate Change

Housing is finally set to evolve significantly towards greater resilience in the face of climate change. Two points are worth highlighting here.

First, the adaptation of the existing housing stock, for which the government has been pursuing an active policy for around ten years and which continues to strengthen. Let us note the entry into force last August of the Climate and Resilience law, which targets properties classified as “thermal sieves” – that is, classified F or G on the energy performance certificate – and even adds those classified E to the list. They will soon be banned from rental, and the collective housing stock is particularly targeted as it is generally poorly renovated. Yet owners have every reason to act: occupants to improve their comfort, reduce their energy bills and increase their property’s value, and landlords mainly for this last reason but also to keep their capital in good condition.

Renovating older properties in this context aims to improve insulation and enable heating and hot water production at lower cost: financial through reduced consumption, and collective through lower greenhouse gas emissions related to energy. Aids are available to reduce renovation costs, such as the Ma Prime Rénov’ scheme.

The second axis concerns new builds, which are designed to protect occupants from intense heat waves and limit the energy consumption needed in winter to heat homes. Current standards are more restrictive than before, but future homeowners can still enhance their action by opting for the most insulating and quality materials, and the least energy-intensive heating equipment: if the initial expenditure is higher, it will be offset by lower bills and the property’s higher resale value.

The property market is currently following a path that should enable it to adapt to tomorrow’s challenges. Being able to live comfortably in a healthy home not too far from one’s place of work involves reducing the proportion of real estate in the budgets of the most modest households or even the middle class. Layout, meanwhile, must follow the needs of a population that is leaving behind part of the housing stock that does not meet its expectations. Renovation, finally, shows a delay in France that can only be explained by poor education of owners about the benefits they would derive from it. Let us together build tomorrow’s housing stock, whose quality will benefit our children!