Is French real estate market suffering from Coronavirus pandemic?

The outcomes we can already observe

Agency chain Guy Hoquet has seen visits increase by 23% on pre-lockdown levels, while other firms, like Laforet, are back to 70% of pre-lockdown activity. And prices, for the moment, haven't moved much; Paris is down 0.1% and Lyon is actually up 0.6% to new record levels.

But will it last? Some agents are now seeing a fall in instructions with only about half the level of properties coming to the market that was the case in the first couple of months of the year. In Limoges, for instance - not one of France's most buoyant markets in terms of price - there is very little supply coming on to either the resale or the rental market, and good deals are snapped up very fast indeed.

The jury is definitely out on how the market is likely to respond post-covid. A few agents expect the market to carry on upwards, in line with earlier trends. But rather more warn that prices could be soft, particularly in markets that looked highly valued, like Paris. Drimki, a valuation site, says asking prices in Paris have fallen 5% during lockdown, and many agents are now expecting prices to fall up to 10%, and even 15% in out-of-the way towns and less desirable suburbs.

As far as the economy goes, trends are more supportive than in some other countries. So far, France has avoided huge unemployment by supporting employees on chomage partiel, so that their employers keep them on till the economy is working again. Freelance workers also got handouts if their business wasn't able to operate. However, some companies have still announced big redundancy plans, and higher unemployment could reduce demand for real estate. That's something investors will definitely want to keep an eye on as we move forwards.

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How has Coronavirus pandemic influenced buyers searches?

One trend we've definitely seen post-lockdown is people looking for more spacious properties outside the city centres. Working from home has proved both the attraction of the lifestyle, and the inadequacy of small city centre apartments to sustain it.

But the 'country' homes the French are looking for are not so much in la France profonde as in the areas within 20-40 minutes of major cities. For instance the Yvelines department, where trains take 45 minutes or less to Paris Montparnasse and village houses sell for EUR 200-350,000, has seen a huge number of searches.

Interestingly enough, there was already a trend for smaller towns on the periphery to perform better than city centres. That's been given even more impulse by the crise sanitaire and a huge number of people who perhaps don't envisage full time teleworking, but two or three days a week. The fact that the government has been pushing a huge high speed broadband network into rural areas also helps - many French villages now have fibre links that are way, way better than their mobile signal.

Find home in French cities and their suburbs

Urban dwellers are moving away to suburbs

French property website SeLoger reports, for instance, a huge increase in searches for Choisy-le-Roi and Gennevilliers, towns in the suburbs of Paris where space sells for less than half what it does in the city centre. You can sell a flat in the 16th arrondissement, for example, and buy a house with a garden in Choisy.

In the same way, the Marseillais are looking at Marignane, the Toulousains are searching for property in Castelginest, and if you live in Lilles you're thinking of moving to Ronchin - all towns just half an hour away but where the same money buys much more space.

However, as one sceptical agent pointed out recently, internet searches are great fun when you're stuck at home teleworking. Whether they'll translate to actual transactions remains to be seen.

After all, who's going to buy all those city centre apartments that will come on the market?

What do we expect from the market this year?

One factor that could put the brakes on a market recovery is that banks have got much tougher on funding property purchases. Atypical borrowers (and in France, that includes the self-employed or anyone borrowing on a second property) can join the tail end of the queue, and anyone whose credit is over-extended will see banks unwilling to lend.

As for the much loved renovation project or second home in the Dordogne, there probably isn't going to be too much change there. The market is probably going to be pretty slow, as until quite recently travel was out of the question. The worst thing is that there is going to be a bit of uncertainty, with no one quite knowing what prices are doing for a while; sales now going through were agreed before the crisis, so the price indices are all out of date. But if you're buying, that could be a good opportunity, as bids below the asking price could stand a good chance of being accepted.

This isn't - at least, not so far - a rerun of the credit crunch. The banks are not haemorrhaging money, and there's not so much supply of new property, either. So it looks as if this will be a funny old year, with some uncertainty about pricing, but that things should gradually normalise as we approach 2021.