Is this an unexpected tipping point that has just taken place on the perimeter of the former Languedoc-Roussillon? If it is new since 2009, it is likely that real estate professionals saw it coming, as they have been warning for years about the scarcity of new housing supply in the Montpellier metropolitan area…
Because according to the analysis of the figures for new real estate in 2021, carried out by the firm Adequation, the secondary markets (Nîmes, Perpignan, Sète, Béziers, Narbonne) have been growth drivers for a market in the Montpellier metropolitan area in sharp slowdown to the point of representing 55% of sales. Usually, these markets account for more than 40% of sales and the dynamic is largely driven by the metropolis of Montpellier.
This shift is the strong point of this quantified analysis of the level of activity in real estate development, which is in line with an observation made at the national level:
« Small and medium-sized towns of less than 250,000 inhabitants in France experienced a higher increase in sales than the national average in 2021, underlines Simon Chapuy, regional director at Adequation in Montpellier. While Île-de-France accounted for 30% of the global market in 2019, it now weighs only 20%. The future will tell us if this is a fundamental trend, but it should also be noted that these territories B2 and C of medium-sized cities have been little invested in real estate development so far and that there is therefore an effect catch-up. »
Especially since between sluggish markets, dwindling stocks and rising prices in metropolitan areas, buyers are moving away, and operators are responding to this demand where there is land available.
A historically low level
What happened in Languedoc-Roussillon in 2021? As everywhere, the upward trend over which real estate development was overdone, particularly between 2017 and 2019, had been hit twice in 2020 by the health crisis and by the traditional brake on municipal election periods.
« in 2021, demand is on the rise again, with a 26% increase in retail sales (4,400 housing units, editor’s note), even if we do not find the high levels of 2017 or 2019, says Clémence Peyrot, expert in Occitan markets at Adequation in Montpellier. But compared to the reference year of 2019, the volumes put up for sale continued to suffer a significant drop of – 20% and even – 38% for the Métropole de Montpellier, against – 13% at the national level… This is the third consecutive year of decline, and we have reached a historically low level for 20 years. This represents 3,450 accommodations throughout Languedoc-Roussillon (5,140 in 2019, Editor’s note), knowing that we have gone up to 6,000 or 7,000 sales per year! This confirms that we are indeed in a crisis of supply and not of demand. »
With the Languedoc-Roussillon market suffering from the double scissor effect of a weak supply and dynamic sales, the supply is dwindling, falling to 2,730 housing units available as of December 31, 2021 (i.e. a drop of -34 %).
« We are close to a shortage, especially since qualitatively, the offer will not necessarily meet the demand in terms of price or geographical location”, warns Clémence Peyrot.
Because on the price side, the market continues its irreducible ascent to reach 4,500 euros / m2, an increase of + 7.2% compared to 2020. Worse: according to Adequation, today, four out of ten available homes are at more than 4,800 euros/m2…
55% of listings in medium-sized cities
The Montpellier region (the metropolis and the Pays de l’Or, Grand Pic Saint-Loup, Pays de Lunel and Vallée de l’Hérault EPCIs) is obviously one of the sectors experiencing shortages: compared to 2020, the decline in put up for sale was – 40% (i.e. a market supply of only 1,600 housing units in 2021) and the level of retail sales increased by + 31%, i.e. 2,500 housing units. A figure to be taken with caution since in the metropolis of Montpellier alone, sales fell by – 17% vs 2019. As a result, the stock of available housing plunged by half compared to 2020 or 2019 (- 46%).
« We will not be able to meet all of the demand, especially since the price increase of + 7% to 4,940 euros / m2 in the Montpellier region is added, even up to 5,000 or 6,000 euros / m2 “, emphasizes Clémence Peyrot.
A situation that has benefited the secondary markets, even if a shift from the Montpellier market to the regional secondary markets is not the only reason for their good health. And this is how the medium-sized towns of Languedoc-Roussillon supplanted the Metropolis, which until then had been a locomotive in terms of real estate…
“This year, the secondary markets have taken a prominent place, with 55% of new home listings, this is the first time since 2009points out Clemence Peyrot. Previously, they represented around 40% and the dynamic was driven by the metropolis of Montpellier. Those markets thus confirm their good health due to a double effect: the postponement of activity in Montpellier but also because that they have their own demand which is confirmed and that the buyers are present. »
Sète “gets some fresh air”
A glance at the figures in the medium-sized towns of Languedoc-Roussillon reveals an increase in sales in the region of Nîmes (560, + 3%), Sète (302, + 0.7%), Béziers (402 , + 150%), Narbonne (192, + 75%), even if on the latter two, the increases are to be put into perspective because they relate to small volumes. The Perpignan region recorded 482 sales, a slight drop of 2%.
Sales are up in the Narbonne (251) and Sète (374) regions, the latter “ giving themselves air and recreating a stock”, comments Clémence Peyrot, who adds, however, that the supply of the market is insufficient compared to the levels of sales in the region of Béziers (361) and Perpignan (348).
« If the market in the region of Nîmes is essentially carried by the agglomeration of Nîmes, this is not the case of the region of Béziers which is mainly supplied by the coastal municipalities where the Pinel zoning is more favorable like Agde or Sérignan, while it remains sluggish in Béziers », specifies the expert at Adequacy.
As for the prices of these medium-sized towns, as in Montpellier, they are increasing everywhere, with a special mention for Nîmes, at 3,990 euros / m2 (+ 7%), the sector weighing 30% of the regional secondary markets) or Sète at 4,260 euros /m2 (+ 7% also). The regions of Béziers (4,240 euros/m2), Narbonne (3,470 euros/m2) and Perpignan (3,820 euros/m2) contain an increase of + 2 or 3%.
Better profitability
The share of rental investors has stabilized at 64% of the market in Languedoc-Roussillon, which explains the geography of popular markets in favorable areas such as Nîmes, Sète or Perpignan. Has there been a transfer of rental investors from Montpellier to these secondary markets?
« Yes to some extentreplies Clémence Peyrot. We must also consider that we have secondary markets where the prices are more affordable, where there is a demand, and where the profitability is therefore attractive, sometimes more than in Montpellier where the prices are very high.. »
Could this dynamic of secondary markets take hold in Languedoc-Roussillon? Without having a crystal ball, analysts from the Adequacy firm remain cautious.
« The metropolis of Montpellier should gradually regain momentum: during the regional conferences (on February 9, editor’s note) Mayor Michaël Delafosse announced the launch of 8,000 housing units in developed areas over two years, including more than 5,600 from 2022, which is important in view of the local housing program which provides for 5,000 housing units per yearpredicts Clémence Peyrot. There is clearly a desire to revitalize the market, which suggests a recovery in activity. But we know that the procedures are long and there is an incompressible time… These new homes will rather feed the market in 2023. »
But she also remains positive about the secondary markets: “ We believe that they are sufficiently balanced and have their own demand to confirm their good momentum, even if the Montpellier region is revitalizing ».
