The real estate market in the face of the health crisis

The COVID-19 pandemic has shaken the whole world and has not spared the real estate market. Economic and social impacts are being felt, with growing uncertainty regarding future prospects. Faced with this situation, many are wondering regarding the evolution of real estate prices : will they continue to increase or experience a significant decline? The answer to this question depends on many factors.

The consequences of the crisis on households

Factors influencing real estate prices

To understand whether a fall in house prices is inevitable, it is essential to take into account the various factors that can have an impact on the market. Some of these elements might lead to lower prices, while others might continue to rise.

demand and supply

One of the main factors determining property prices is the balance between demand and supply.. If demand exceeds supply, prices tend to rise. Conversely, if supply exceeds demand, prices fall. The health crisis has certainly affected this report:

• A drop in demand for certain types of property (notably city center housing and second homes)
• An increase in demand for detached houses with a garden or more spacious apartments
• A slowdown in the construction of new housing due to health restrictions

Interest rates

Interest rates also play an important role in the evolution of house prices. Low interest rates make it easier and cheaper to access mortgages, thus promoting demand and supporting prices. Recently, interest rates in France (which were historically low), have experienced a large increase, which might contribute to reducing property prices despite the crisis.

When real estate goes all right?

Well following having been an inexhaustible source of money and dreams… is this the end of a cycle for the real estate bubble?

Banks are turning off the credit tap, prices are meaningless, interest rates and inflation are reaching… pic.twitter.com/FND0Ar25Ii

— Bertrand SCHOLLER (@55Bellechasse) April 20, 2023

Prospects for owners and potential buyers

The risk of a general decline in prices

Given the current economic uncertainties, it is not excluded that real estate prices will experience a decline in the medium or long term. However, it is important to note that this development might vary depending on the region and type of property. Thus, some sectors might be more affected than others.

Opportunities for buyers

For people wishing to acquire real estate, a possible drop in prices might represent an interesting opportunity. However, it is essential to take into account other factors such as interest rates or the ability to obtain a mortgage.

• Take advantage of falling prices to invest in real estate
• Be attentive to market developments to seize the best opportunities
• Compare mortgage offers to benefit from the best rates and conditions

Precautions for owners

Even if a general drop in prices is not guaranteed, owners should remain cautious and monitor the evolution of the market. It may be wise to:

• Think regarding your long-term real estate projects (conservation, sale, rental)
• Do not panic in the face of temporary price fluctuations
• Stay informed of economic and legislative developments that may impact the real estate market

In conclusion, it is difficult to predict with certainty whether a decline in property prices is inevitable. Factors such as demand and supply, interest rates or overall economic developments can influence the market in unpredictable ways. It is therefore essential for owners and potential buyers to remain attentive to market developments and to take into account all the parameters in order to make the best choices in terms of real estate investment..