Mortgage Insurance: Why Does the Lemoine 2022 Act Need a Change?

Mortgage Insurance: Why Does the Lemoine 2022 Act Need a Change?

City or countryside: we are redoing the property battle in 2022!

The health crisis due to Covid-19 and its successive lockdowns have changed the French’s relationship with their home. The countryside has come back in force to the detriment of the cities, especially the metropolises, which have revealed all their disadvantages. Does this trend continue in 2022, a year characterized by a geopolitical and economic context full of uncertainty? The landscape: everyone’s dream In 2020, Covid-19 revealed the shortcomings of the concentration in the city. Many city dwellers, especially those who lived in very urban settings, took the plunge and moved to the countryside. If at the same time the city concentrates advantages that rural areas can hardly bring forward (jobs, leisure, culture, access to care, etc.), it has been overtaken by its disadvantages thanks to an unprecedented health crisis. A Cadremploi survey published in August 2020 showed that more than 8 out of 10 Parisian managers aspired to leave the capital to find a better living environment in the countryside or in a small town. Living in the city or in the country, the choice of well-being was quickly decided by those who could afford to buy a property with a garden on the outskirts of cities or in rural areas, while working remotely. The rise of telecommuting has favored the remoteness of big cities. Mortgage rates in 2020 and 2021 were at historically low levels and housing supply was still adequate before inventories dried up from mid-2021. Some people fantasized about a city escape that was quickly overtaken by the reality of the job. When you leave Paris in the countryside, there is a gap from dream to reality. But we have seen the emergence of a new practice, born of the different confinements: the semi-main residence or changing city and landscape for the better off financially. Another strong trend: living away from your workplace. It is impossible to renounce the attractiveness and dynamism of metropolises such as Lyon, Nantes, Aix-Marseille, Toulouse, Rennes or even Bordeaux, all connected by TGV, but today the hyper-urban, such as the hypermarket and hyperconsumption, no longer correspond to the expectations of the French. The house, the new property grail Figures from notaries always give the best insight into the state of the property market. The reform of DPE (Energy Performance Diagnosis) and the ban announced in 2021 on part of class G homes from January 2023 has accelerated the decision to sell to the owners of this type of energy-demanding properties. In 2021, 41% of transactions for old houses with an F or G rating, commonly known as thermal si, were in rural areas, and of those sales, 66% were for houses. All brands combined, rural areas accounted for 30% of real estate sales in the old. The year 2022 should deepen the phenomenon due to regulatory pressure on landlords. In 2020 and 2021, houses are raising property prices, and who says house, often means a location on the outskirts of large cities, in small and medium-sized towns, even in the countryside. The year 2022 looks set to continue this trend as we head towards a price drop in the big cities in 2023. The price increase of existing homes continued in the second quarter of 2022, but the beginning of an inflection is observed. House prices rose 8.5% year-on-year in Q2 2022, compared to 4.5% for apartments. Since the start of 2021, house prices in the provinces have increased more strongly than for apartments (+9% over a year in the 2nd quarter of 2022 against +7.6%). The most popular land areas for real estate In 2022, the countryside and the coast remain the dream of city dwellers. The newspaper Le Figaro has compiled a ranking of the rural areas according to the evolution of the average prices for the sale of country properties between 2018 and 2021. Calvados tops this list, a department with a beautiful stretch of coast that enjoys its proximity to Paris. Prices have risen 32.5% in four years. Another department close to the capital (about 230 km from inner Paris), Haute-Marne has also seen its prices rise: +29.5%. In third position, Finistère, where property inflation reached 27.7%. Four departments, on the other hand, saw their prices fall between 2018 and 2021: Ardennes (-8%), Haute-Corse (-5.88%), Ariège (-1.77%) and Hautes-Alpes (- 1.74 %), four areas that have benefited least from the attraction of telecommuting due to their isolation and their distance from large cities. The other side of the coin for the areas that are popular with the inhabitants of the big cities, the locals can no longer buy. By the sea, prices have increased by up to 50% for properties with charm or character, such as half-timbered or thatched houses on the Normandy coast, which are often acquired as holiday homes. First-time buyers are excluded from these markets, which require an extraordinary personal contribution (more than 25%). A group has even been formed in Brittany (Dispa’ch) to condemn the crazy rise in property prices and to demand that buying a home in the region be reserved for people who have lived there for at least a year. The lack of properties in Brittany is creating tension in the market like never before. Some municipalities in tight areas offer alternatives in the forms of access to property, such as Bail Réel Solidaire, which separates buildings from land and allows to buy up to 40% less than the market price. As a whole, the real estate market for 2022 is gradually deteriorating given the loan conditions. Interest rates are at a 7-year high, we are witnessing an abysmal drop in the number of loans due to usurious rates placing mortgages in a sub regime. According to notaries, 19% of real estate projects are now compromised due to the problem of attrition, prompting some to wait until 2023 to borrow.


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