The signs of recovery should not hide the financial weakening of households after the pandemic. The market could drop.
An increase in prices in trompe l’oeil
The real estate market is quivering after the containment period, but it is sending mixed signals. Estate agents are making visits again, the opposite would be surprising, after two months of complete shutdown. INSEE figures for the first quarter reflect a 5% year-over-year price increase in the previous year. Please note: these are transactions initiated before containment.
Financial weakening will affect households
While interest in homes with gardens and the countryside has been identified in Internet searches, there is no evidence that these desires will materialize. Many professionals are even expecting a very calm real estate market and falling prices. This is the case of Henry Buzy-Cazaux, the president of the Institute of Management of Real Estate Services. Real estate would be the only sector to escape the crisis. Jobs will go into the red, banks will reduce credit conditions and the financial weakening will affect all households, the question is whether there will be creditworthy customers, says the expert who expects a drop in the number of transactions from 20% to 30% in 2020. As in previous crises. “According to the Paris Chamber of Notaries
, cited by Le Figaro , the abandonment of files soars: “10 to 15% of compromises do not go to the end. Either because the acquirer becomes cautious, or because the Bank is worried.
Price drop of 5% predicted in metropolitan areas
To those who believe in the rebound of a need market
, Henry Buzy-Cazaux recalls that we can do without second homes or rental property, but that’s a third of the market. Many transactions have been canceled and buyers are negotiating prices.
Under these conditions, Henry Buzy-Cazaux predicts a price drop of 5% in metropolitan areas in the coming weeks and from 5% to 10% in medium-sized cities.
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