Housing situation in France: are the residential real estate markets teetering on the brink?

[April 2021] With the exacerbation of the economic and social crisis, the credit crunch, and the persistent wait-and-see attitude adopted by French households, the residential real estate markets could gradually find themselves ‘teetering on the brink.’

After holding up well last year in the midst of a crisis caused by factors beyond the control of the real-estate market itself, the old-build sector experienced a marginal decline in early 2021. Even if the market continues to benefit from attractive home loan interest rates, the conditions under which it operates seem to be changing. Bogged down by production issues, the new-build segment finds itself backed into a corner by the crisis, responsible for delaying its ability to rebuild supply in a market where demand still remains strong on the part of both households and institutional investors, once again attracted by residential assets.

The single-family home, which remains the dream of a great many French people, is a product highly sought after by households looking for additional living space and a higher quality environment but demand is confronted by problems in the old-build sector (quality, comfort, price, location) as well as in the new-build segment (difficulties in supplying raw materials and building materials, etc.).

The economic recession and its social repercussions could well exacerbate the fragility of the rental market owing to structural imbalances despite the renewed interest on the part of institutional investors in housing.

To learn more about this research carried out by Groupe BPCE’s economists, see below: