The Real Estate Market At The End Of 2020: A Return To Stability?
This year 2020 would have been synonymous with a roller coaster for many companies and particularly real estate, both due to fluctuations in operation and to the uncertainty created by the health crisis. It seems like a return to a certain equilibrium can be seen at the end of the year, helping the different players to project themselves more peacefully. Explanations.
A protectionist banking history
To grasp part of the situation in the real estate industry in 2020, we have to go back to the year 2019. More precisely, at the time, the High Council Guidelines on Financial Stability urged a tightening of the requirements for issuing loans. Thus, in order to guarantee credit stability, a debt level over 33 percent and loans above 25 years old were circumstances that had to be prohibited.
This institution’s authority then raised worries that the economy would slow down due to the added complexity of granting a loan. Such a scheme arose from the uncertainty of an impending economic recession, already envisaged long before the coronavirus had arrived and the lockout that resulted. Since last winter, the amount of purchases has declined naturally: can we assume that the health crisis has had a lower effect than one would think? We will definitely be updated on this point in the coming months.
The post-confinement boom
The hoped-for result took place after the genuine concern: deconfinement has helped the market to recover strongly. It is possible to list many reasons:
- Deals in real estate blocked since the beginning of the year have been signed;
- Projects scheduled during the time of incarceration had to be delayed until the summer;
- Containment restrictions have given rise to a demand for more open, outdoor accommodation, both in the city and in the countryside.
Therefore, it was after several months of detention that real estate agents unexpectedly saw their connexions, mandates, and revenues rise. Demand has risen for home sales. Concerns over rising interest rates and rising inflation have proved to be baseless and the figures tell us that production levels have been smashed in the summer.
An operation capable of reassuring all participants in the market, as well as helping to return safe cruising pace to economic life in view of the health initiatives in place.
A return to normal this fall?
Some have observed a lull in recent weeks and fear a sharp slowdown in the real estate In recent weeks, some have noticed a lull and fear a sharp downturn in the real estate market before winter. However, it is likely that there would definitely be a substantial reduction in the number of sales, but more the result of a return to well-known equilibrium.
Let’s not ignore that the real estate industry is cyclical and needs to take account of the normal seasonality. It is normal to find that the best season for beginning a real estate project is spring. As well as the willingness of families of children to take advantage of the long school holidays to move, the return of sunny days is definitely for everything. Conversely, joining the decline, with its impact on household morale, is more associated with isolation and contemplation. Nothing exceptional, then, to mention a series of decreased buying projects in September.
It should also be remembered that the health crisis that is once again troubling certainly places the brakes on any buying or selling decisions that will be activated as soon as the outlook is clearer. The risk of a second lockout calls for caution from persons who are sometimes financially impaired by the first one.
While the growth of the real estate sector is impossible to forecast without being aware of the health crisis, it appears premature to fear the lack of the rewards of change this summer. For now and after containment, transactions, considering the stance of the banks, have pursued a standard path, which remains conservative.