Market Trends of France Luxury Residential Real Estate Industry
Metropolitan France Experiencing Significant Gowth
The French market is witnessing significant growth as citizens searching for second homes sustain the luxury real estate market. In addition, French buyers dominated the market, as the pandemic restrictions suppressed overseas demand for the market. In 2021, there were 67.4 million people living in France, with 65.2 million of them living in Metropolitan France (the European portion of France plus Corsica) and around 2.2 million living in its overseas territories (French Guiana, Guadeloupe, Martinique, Mayotte, and Reunion). New Caledonia and French Polynesia are two other large dependencies.
Furthermore, the average price for prime real estate in France saw a growth rate of 1.3% in 2020, and the number of sales increased by 5% in the six months ending in February 2021. The French government has deployed EUR 604 billion in additional spending and liquidity support, which has boosted consumer confidence. Meanwhile, mortgage rates are at 1.11%, a historic 50-year low according to the Bank of France, which helped homeowners looking to relocate or purchase a second home during the pandemic find it a relatively affordable option.
However, the France metropolitan area saw growth in sales of detached houses; in Q2 2021, the reservations for single detached homes experienced a significant growth rate of more than 18.9% compared to the same quarter in 2020. Despite the pandemic disruption caused in the housing market, detached home sales are on the rise in 2021 compared to 2020. In addition, the outstanding units reserved for sale in Q1 2021 accounted for more than 30,497 units, with a growth rate of 10.44% compared to the previous quarter.
Detached Home Sales are Witnessing Lucrative Growth
Despite the pandemic crisis, the market recovered significantly in the country. There are three motivations driving the luxury real estate market in the country: one is that French people are upgrading their existing residences (such as upgrading outdoor spaces, expanding rooms, or shifting locations); a second motivation is that the new interest in second homes is currently driving the luxury residence market in the country; and the final motivation is a change in lifestyle, as some people are settling in the outskirts of the city and enjoying a better quality of life by utilizing modern technologies.
Furthermore, the luxury residential market in Paris is witnessing a rise in property prices. By the end of 2022, high-end luxury properties in Paris are expected to surpass London in terms of property prices. In 2021, the French capital recorded the highest average price of EUR 10,000 per square meter. Whereas high-end property expert Barnes ranked Paris as one of the five most expensive cities in the world for luxury real estate.Even Brexit has contributed to the growth of the luxury home sector in Paris.
Meanwhile, the rebound in detached home sales accounted for a growth rate of more than 48% between Q1 2021 and Q2 2021. In addition, the demand is growing, as 75% of people in France have a dream of living in a detached house with a garden, as per the survey conducted by France's housing ministry. In Q1 2021, the average selling price of detached houses in different regions was as follows: Zone A + Bis with EUR 403,390 per batch, Zone B1 with EUR 314,883 per batch, and Zone B2 + C with EUR 267,330 per batch.
