No. 52 - July 2021

INSEE AND NOTARY PRICE INDEX VARIATION*

OLDER PROPERTIES OLDER APARTMENTS OLDER HOUSES

3 months 1 year 3 months 1 year 3 months 1 year

Mainland 1.4% 5.9% 1% 5% 1.7% 6.6%

Greater Region 0.6% 4.7% - 0.1% 3.6% 2.2% 7.1% (Île-de-France)

French Provinces 1.7% 6.4% 1.9% 6.3% 1.7% 6.5%

* Three-month variation (seasonally adjusted): between the fourth quarter of 2020 and the first quarter of 2021 One-year variation: between the first quarter of 2020 and the first quarter of 2021 Change in shape of the real estate market The volume of sales of older properties over the last Changes in the sales volumes of older properties in the period 2000/2021 twelve months reached 1,130,000 transactions 1 200 000 May 21 : 1,130,000 at the end of May 2021, a record level since 2000. This volume is all the more remarkable March 21: 1,080,000 because, even if it includes the deferral of sales 1 100 000 not made during the first lockdown, it reflects, January 20: 1,075,000 above all, the dynamism of the housing market 1 000 000 throughout that period. January 18: 965,000

The trend highlighted in the previous quarter 900 000 July 20: 981,000 is even more apparent: if the number of May 06: 837,000 February 12: 834,000 transactions increases, it is in favour of a new typology of properties and toward 800 000 geographical areas away from major cities.

Some properties that were then responding to 700 000 essentially local demand are now being sold to a wider range of users. We observe relocations, February 13: 653,000 particularly to small towns and even to medium- 600 000 sized towns1. August 09: 564,000 500 000 This was initially felt specifically for older homes Dec.-00 Dec.-02 Dec.-04 Dec.-06 Dec.-08 Dec.-10 Dec.-12 Dec.-14 Dec.-16 Dec.-18 Dec.-20 Dec.-21 around the capital, with Parisians showing a Number of older properties sold in total over 12 months - All of France (excluding ). Source: CGEDD according to notary marked trend toward smaller cities, mostly located databases and DGFiP (MEDOC) in adjoining departments. The new fact is that the 3,500 inhabitants located in the neighbouring The number of "departures" increased by 13% figures for the notarial real-estate base show a departments (Isère, , ), in greener areas, despite a higher number of transactions at the similar trend in older homes in other cities: thus, also probably more financially accessible. This end of 2019 than at the end of 2020 (1,067,000) around the metropolis, and as early as the desire for greenery, supported by the impromptu transactions compared to 1,024,000 transactions). second half of 2020, the Lyon residents oriented rise of remote working, seems to reflect a desire their departures more toward cities of less than for “connected disconnection.” Unequal price impact In the first quarter of 2021, the increase in the 1 - Barometer of the real estate of the middle cities, This same analysis of the notarial real estate bases, price of old housing in metropolitan France Conseil supérieur du notariat et Agence nationale de carried out around Toulouse, reflects a similar slowed to +1.4% compared to the fourth quarter la cohésion des territoires (Notaries upper council and progression, for the city of Toulouse as well as National territories cohesion agency), June 2021 of 2020 (provisional seasonally adjusted data), for the Toulouse metropolis, toward cities of less after +2.4% in the previous quarter. than 3,500 inhabitants, even if the Haut-Garonne LATEST TRENDS residents do not tend to leave their department. Over the course of a year, the price increase also decelerates: + 5.9%, following + 6.4%. Older Older These movements remain reasonable, even apartments houses This is mainly due to a slowdown in the apartment if tangible. What seems to be a beginning of Change 3 months* 2% 1% market: 5% over one year compared to 6.3% in generalisation across French cities echoes the the fourth quarter of 2020. In houses, the increase Change 1 year* 5.5% 8.9% fact that in the second half of 2020, the French is similar to the previous quarter: +6.6% over one *Change in early indicators based on pre-contracts had a greater propensity to leave their home year compared to +6.5% in the fourth quarter of In metropolitan France: forecast at the end of August 2021. department than in the second quarter of 2019. 2020. The predictions from the pre-contracts in ••• No. 52 - July 2021 Median price per SQ. M. OF OLDER APARTMENTS IN THE 1st QUARTER of 2021

Change over one year: 1 January 2021 to 31 March 2021 / 1 January 2020 to 31 March 2020

Lille €3,490 Amiens 6.2% €2,060 Metz 3.6% €2,090 Reims 10.2% € Rouen 2,250 € 5.8% 2,450 Paris Nancy Caen 3.7% €10,640 € € 2,060 2,410 1.7% 10.6% Rennes 16.2% €3,360 8.7% Strasbourg Orleans €3,060 Tours €2,180 € Mulhouse 4.6% 2,600 6.3% €1,120 10.6% 9.3% Besançon Nantes €1,870 €3,720 5.9% 7.8% Bourges € €1,250 Saint-Étienne Dijon 3,240 € € 13.7% -4.7% 1,000 2,310 Poitiers 4.8% 9.3% €2,020 17.5% €2,520 Lyon 7.9% Limoges €5,000 € 1,380 Clermont- Nimes 8.4% 10.3% €1,900 Reunion Ferrand € €1,850 10.7% Grenoble Nice 2,140 €4,100 4.3% Bordeaux 8.8% €2,300 4,440€ -0.5% 4.3% 2.2% Toulon €2,260 7.5% Bayonne € Toulouse Annual price change per sq. m. 3,490 € Upper 14.8% 3,140 € Less than -2% 7.1% 2,630 Montpellier Marseille 8.4% From -2% to 2% €2,930 €2,620 7.6% More than 2% 1.9% South Corsica Source: Property databases of Notaires de France (The prices for the Greater Paris Region €3,610 are valuations from the INSEE and Notary indices for the first quarter of 2021) 8.4%

Median selling price OF OLDER HOUSES IN THE 1st quarter of 2021

Change over one year: 1 January 2021 to 31 March 2021 / 1 January 2020 to 31 March 2020 Statistics for houses refer to the whole agglomeration (city centre + suburbs)

Amiens Lille €179,500 €205,000 Rouen 18.1% 7.9% € Reims Le Havre 176,000 €227,800 €184,000 4.5% -1% 2.2% Metz Caen Greater Paris €243,500 €235,000 €338,300 13.3% Brest 6.8% 7.1% €204,000 Chartres € Nancy 10.3% 219,000 €191,500 10.3% 1.7% Tours Troyes €240,000 €168,800 6.7% 8.6% Orleans Nantes €210,000 €332,500 0.3% 9% Dijon Saint-Étienne €256,000 Angers Châteauroux €215,000 5.2% €265,000 €130,000 7.5% 7.5% Poitiers 5.7% €179,000 Lyon 11.9% €395,000 Limoges 9.4% € Nimes Reunion 166,000 10.7% €228,600 €220,000 5.3% Grenoble 2.1% €324,700 4.7% Toulon Bordeaux Montauban € € € 421,500 359,400 190,000 9.9% 5% 5.4% Upper Corsica Annual change in selling prices €271,600 Less than -2% Toulouse 4.7% €301,000 Montpellier Marseille/ Aix-en- From -2% to 2% 0.3% €386,200 Provence € South Corsica More than 2% 13.7% 337,500 € 5.5% 445,900 Source: Property databases of Notaires de France 17.3% (The prices for the Greater Paris Region are valuations from the INSEE and Notary indices for the first quarter of 2021)

No. 52 - July 2021 Variation in the prices of old housing over one year in France The recent recommendations of the High Financial Stability Council (HCSF)3 seem to reinforce the borrowing profiles on parameters that are more relevant to good banking practice already in place than to coercive measures. An increase in rates would not break market dynamism: in fact, borrowers are aware that they are currently exceptionally low; no indicator suggests a sharp rise, so a reasonable increase in rates would not significantly alter the purchaser- borrowers’ cash-flow effort. The French morale does not deny this desire to invest, and is finally rebounding after a chaotic year, though still below its long-term average4. The French now consider it less necessary to save, which can spur them to shift their spending toward well-being and a better living environment. The mechanisms put in place by the public authorities, in real estate and elsewhere, helped to prevent panic. The morale and savings made Field: Metropolitan France. Sources: Insee, ADSN-BIEN-Notaries of the Greater Paris Region, Notaries of France - Perval. during the lockdowns allowed many French to embark on a new home purchase. metropolitan France forecast, by the end of August price of apartments is expected to reach €10,720/m² 2021, an increase in the prices of apartments over in August 2021, an increase of 1% in three months, But has the health crisis redistributed the cards? a year slightly higher than that recorded in the while prices are expected to stabilise (-0.2%) over Or will the recent trend change the long-term first quarter of 2021 (+5.5% at the end of August the next year: but the upward pressure in recent consumption of real estate? Bricks and mortar has always kept a place of choice in the heart of 2021). The momentum already seen in the house quarters seems to have come to an end. Sales take the French. But today, it is no longer seen as an market appears to be confirmed, with a significant place on average in three weeks in Paris, where, investment, a safe haven or source of return, but acceleration of the price increase at the end of in particular in South Brittany, properties for sale as a guarantor of quality of life, a sign of, perhaps August 2021 at +8.9%. have become rarer. transient, changes in consciences. But these national trends are not indicative of the full But, at this point, it is premature to argue that this The new housing market - Key figures reality of market developments and the pendulum trend heralds a lasting redistribution of the housing Housing building effect. The steady and pronounced rise in house market, or stems from a fleeting phenomenon, more directly linked to the health crisis. But this Results at the end of April 2021 prices confirms the appeal to a greater need for St@t info no. 368 - May 2021 space, especially for residents of large cities. But change in property morphology seems to be they export their home-buying power with them, widespread in the European Union, and even in Multi- England and Wales2. Change Single occupancy which does not necessarily correspond to that All Q/Q-1 (*) occupancy buildings of local users. This imbalances these markets (including upwards, generating abnormally high and not Interest rates still in support blocks of flats) always justified prices. Despite some fluctuations, interest rates remain Approved - 1.5% + 6.4% - 7.6% low; the average interest rate for new home loans housing On resonance, the start of departures from the big reached a new low of 1.15% in April 2021, and cities is causing a drop in price rises: for example, Builds in thus helps to sustain dynamic transaction volumes. + 7.6% + 2% + 11.8% in the city of Paris, there is a plateau effect, as a progress result of a sharp drop in volumes (-14% in the capital (*) Last three months compared with the previous three months. 2 - https://www.theguardian.com/society/2021/ Source: SDES, Sit@del2, estimates at the end of April 2021 over a year at the end of the first quarter of 2021). jun/20/rural-house-prices-in-england-and-wales-rise- According to the indicators on pre-contracts, the twice-as-fast-as-in-cities Commercialisation of new housing Results for the first quarter 2021 St@t info no. 362 - May 2021 Credit - Banque de France data First quarter of 2021 The average interest rate for new home loans reached a new low of 1.15% in April 2021, +16.2% over one year after 1.18% in March 2021. Number of reservations (30,497 units) Rates of new home lending (of all terms) +12.1% over one year Offered for sale (23,445 units) 2,20 -11.4% over one year Housing outstanding 2,00 (90,643 units) Cancellations of +0.6% over one year 1,80 reservations for sale (3,900 units) Source: SDES, ECLN 1,60

1,40

1,20

1,00 3 - https://www.economie.gouv.fr/files/2021-06/ apr.-16 apr.-17 apr.-18 apr.-19 apr.-20 apr.-21 HCSF%2020210615%20Communiqu%C3%A9%20 de%20presse.pdf Rates (including renego�a�ons) Rates (excluding renego�a�ons) Source: 4 - https://www.insee.fr/fr/statistiques/5387197 - Banque de France "En mai 2021, la confiance des ménages progresse".

No. 52 - July 2021 The real estate market in France and the European Union A 15-year comparison

he Eurostat housing price index reflects price changes for all types of France has suffered more from the sub-prime crisis housing purchased by households in the 27 countries that make up than Sweden or Germany the European Union today. It is one of the "Euro-indicators" which aim T Housing prices were not affected in the same way across countries during to give a general overview of the economic situation in the euro area, the the “sub-prime” crisis. In 2007, with the exception of Germany, where prices European Union and the Member States. Thus, we can compare changes in house prices in the European Union, identifying four major phases since were almost stable, they were still up sharply in France ( +6%), Sweden (+12%) 2005, including the consequences of the “sub-prime” crisis of 2007/2008. and Spain (+10%). But by 2008, prices changes in these four countries were between -1 and +1%. Housing price indices In 2009, while prices in the European Union were down by 4%, they were 160 EU - 27 Germany falling more sharply in France (- 6%) and Spain (- 7%) but remained stable in France Sweden Germany (+1%), while they were still increasing in Sweden (+3%). By 2010, Spain 140 the decline ended in the European Union, with prices stabilising. France is one of the countries with the largest recovery, with prices rising by 5% over a year. 120

100 Between 2005 and 2020, house prices rose less rapidly in France than in the European Union 80 Between 2005 and 2020, in France, while housing prices generally followed 60 the same trend as in the European Union, the price increase remains more “SUBPRIME” moderate (+38% compared to +46% in the European Union as a whole). If we CRISIS 40 analyse the dynamics more closely, between 2005 and 2015, the increase is 20 19 05 06 07 08 09 10 11 12 13 14 15 16 17 18 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 comparable to that recorded in the European Union (+18% against +16%), but Source: Eurostat (housing price indices; base 100 = 2015). is lower in the recovery phase between 2015 and 2020 (+17% against +27% Housing price indices in Spain are only available from 2006 onwards. for the whole European Union). In comparison, price developments between 2005 and 2020 are much greater in Germany (+66%) and Sweden (+135%). Four major phases of housing price developments in the European Union In Germany, prices rose in the same proportions as in the European Union as a whole over the same period between 2005 and 2015, but more strongly Since 2005, housing prices1 in the European Union have increased by 46% afterwards (+38% between 2015 and 2020). Conversely, in Sweden, the in four major phases: increase was much higher before 2015 (+92%) and was similar to developments I 2006/2007: strong increase (+9% per year on average) throughout the European Union over the same period. Spain, for its part, I 2008/2009: slowdown then decline following the so-called sub-prime is distinguished by a general decline in housing prices of 6% since 2008. crisis (+1% in 2008 and - 4% in 2009) Between 2006 and 2015, prices decreased by 26% and then increased by I 2010/2014: stagnation (average of 0% per year) the same proportions as in the European Union as a whole until 2020 (+28% I 2015/2020: resumption of the increase (+4% per year on average). between 2015 and 2020).

1 - Old and new housing combined.

Definitions Seasonally adjusted indexes In the same way that the index calculation method smooths out structural effects, corrected seasonal variations adjust seasonal fluctuations. The purpose is to ensure a fair comparison of trends between two consecutive quarters, without this interpretation being distorted by the time of year. For example, property prices rise during the third Contact: Conseil supérieur du notariat (High Council of quarter of each year, house prices in particular, due to demand from families driven by French Notaries), Development department the school year. Editorial committee: Peggy Montesinos, Frédéric Violeau, Median prices Thierry Delesalle, Elodie Frémont, Françoise Vichot, Olivier The INSEE (French National Institute of Statistics & Economic Studies) and Notary Compère, François Proost, Mathieu Ferrié, Quentin Mouton indexes are only available for geographical areas where the number of changes of Publication Director: Isabelle Mariano ownership is high enough. At more detailed levels, median prices are used. The median Published by: Conseil supérieur du notariat price is such that 50% of transactions were concluded at a lower price and as many 60, boulevard de La Tour-Maubourg - 75007 Paris at a higher price. It more accurately represents the “midpoint” of the market than the Tel.: +33 (0)1 44 90 30 00 - www.notaires.fr average, as it is less affected by extreme values. Production: ADNOV INSEE (French National Statistics & Economic Studies Institute) and Notary indexes Page layout: Speed des clics… The calculation method used for the INSEE and Notary indexes is based on econometric models which break down the price of a property according to its main characteristics Photo Credit: FG (location, size, comfort, etc.) in order to be better able to withstand structural effects that ISSN: 2100-241X cause transaction prices to vary from quarter to quarter.

No. 52 - July 2021