As the year 2023 draws to a close, it’s time to assess the evolution of the real estate market overall and, more specifically, in Port Grimaud.
Dull Real Estate Market in 2023
The euphoric period of the real estate market in 2021, marked by a record number of transactions, has given way to a dull atmosphere in 2023. Even though the year 2022 maintained a high sales volume, the production of real estate loans has experienced a significant drop. However, this decline has not yet prompted sellers to adjust their prices downward. The impact of this sluggish trend seems, for now, contained, creating a period of wait-and-see in the sector.
Impact of interest rates and the climate crisis
After reaching a historic low in January 2022, interest rates have started to rise, influencing the real estate market. This increase in rates coincides with the climate crisis, leading to the adoption of the Climate and Resilience Law. The obligations for energy renovation have created uncertainties, especially for modest landlords, while causing a slowdown in the existing home market in some major cities. New regulations, such as the increased importance of the Energy Performance Certificate (DPE), have a significant impact on buyer behavior. According to Thomas Lefebvre, scientific director at MeilleursAgents, as part of a study for SeLoger.com, « 90% of future buyers consider a poor DPE as a negotiation lever or declare that they only visit properties with a good DPE. »
Contrasting Trends and New Rules of the Game
The real estate market in 2023 presents contrasting trends. While prices are experiencing a slowdown in some major French cities, notably in Paris, Lyon, and Bordeaux, it’s important to emphasize that this doesn’t signify a widespread collapse. Sellers, more inclined to wait than to reduce their claims, contribute to maintaining a period of uncertainty.
Simultaneously, the new real estate market faces paradoxes with a sluggish supply and high costs, complicating property access for first-time buyers. On the other hand, the second-home market remains dynamic, supported by remote work.
The Exception of the Second-Home Market
Coastal cities, especially those on the French Riviera, which are suitable for both primary and secondary homes, continued to see their prices rise in 2023. This is the case for Nice or Marseille, but also for Grimaud (+14% in one year).
In our village of Grimaud, the Covid effect is not fading, quite the opposite.
As you can see in the graph below, prices fluctuated around 6000€/m2 between 2015 and 2020/2021.
Despite historically having an international clientele, mainly comprising our nearby Italian, Belgian, and English neighbors, along with numerous Americans, the Covid era witnessed a significant surge in French buyers.
As you’re aware, the Covid period notably boosted real estate prices in peri-urban areas, as a considerable number of French residents felt the urge to embrace a greener lifestyle or invest in secondary homes.
Since the reopening of borders, our international clientele, constituting more than half of our buyers, has made a robust comeback, accounting for the upswing in real estate prices.
Among these buyers, a majority makes purchases without resorting to bank loans. Consequently, we find ourselves amidst a distinctive real estate climate in Port Grimaud.
In many cities across France, challenges in securing credit mean that the same property may hit the market 3 or 4 times due to loan refusals, compelling anxious sellers to reduce their prices. This phenomenon is foreign to us and, in my opinion, contributes to upholding market prices in the real estate sector.
Additional factors have been detailed in this article.
Therefore, there is no need for concern after reading alarming headlines about the real estate market in France. The situation in Port Grimaud remains very reassuring for investors.