The old housing market stopped for two months and "we will not be able to make up for these two months", underlines the Parisian notary Thierry Delesalle, on the occasion of the quarterly figures on the market, established jointly by the profession with the 'Insee. For 2020, "we can expect a drop of 150,000 transactions across France," he said, which would represent a drop of 15%. But during the coronavirus epidemic, price increases continued.
During the confinement put in place between mid-March and early May, it was impossible to visit accommodation and very difficult to complete a transaction, even if the government facilitated virtual signatures with notaries. Hence the drop in transactions.
Before this sudden stop, the market was flourishing
National INSEE figures do not yet give the full measure of this halt. Not only do they stop only at the end of March, but they run for the whole of the twelve months that have elapsed on that date, which considerably attenuates the variations.
Sales therefore remain for the time being above the annual million mark. Over the twelve-month period ended at the end of March, 1.04 million transactions had been carried out, a slight slowdown compared to the level observed for the whole of 2019 at 1.07 million.
To really measure the extent of the fall in the market, we must look at the figures established by the only notaries from Ile-de-France who focus on the first quarter. There, it is a decline of 22% in the Paris region and it is only the beginning. "We can think that there is a 90% drop in sales ..." during the confinement, reported Thierry Delesalle.
Before this sudden stop, the market was flourishing. The prices, in particular, did not stop increasing each year, passing even the 10,000 euros the square meter in Paris.
"The new prices will be more in the third quarter"
If the fall in sales is a certainty, the evolution of prices remains a major unknown. For the time being, they have continued to increase and even accelerated it. Between January and March, their average level increased by 5% compared to a year earlier, a general progression between houses and apartments, as between Ile-de-France and province.
But these variations say nothing about the potential effects of confinement and, beyond, the crisis. They reflect negotiations carried out well in advance between buyers and sellers. Even now, "the promises we are signing at the moment are still catching up with [negotiations] that were done in March," warned Thierry Delesalle. “We are still a bit on the old prices. The new prices will be more in the third quarter. "
Illusory to fear, or hope, a fall in prices
The sector can therefore expect several months of speculation and fragmented figures depending on the players, whose opinions revolve between two main trends. For some, the crisis will not change the demand for housing, especially in big cities like Paris where the supply is insufficient. It is therefore illusory to fear, or to hope, a fall in prices. For others, real estate, despite its reputation as a safe haven, cannot escape the consequences of a major economic crisis.
"If you have two million more unemployed, there will be an impact on the real estate market, that's obvious," said Thierry Delesalle. The attitude of the banks in particular promises to be crucial. How much will they limit home loans when they have been booming for years, helping to support demand and drive up prices?
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"The banks today are tightening the tap," reported Thierry Delesalle, fearing that this would initially affect individuals, often young and not very wealthy, who buy their first home. "The selection of files is starting to be a little worrying," he noted, for the rest refraining from playing the "crystal ball" on the evolution of prices.
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