a destabilized real estate market … and it is likely to last
From Genevois to Chambéry, via Annecy, the concrete mixers are idling. Although these real estate markets are different from others, the production of new housing is still suffering the shock wave of the health crisis.
Everywhere, new construction is destabilized. The stock of completed homes is rapidly melting, while housing starts have slowed sharply. All with its share of price consequences.
“The new home market is absolutely not fluid at the moment,” laments Olivier Gallais, president of the Federation of Real Estate Developers (FPI) in the Alps.
Obviously, the successive confinements have largely limited the issuance of building permits. But not only: “The soaring prices of certain materials such as wood or aluminum are slowing down the supply of construction sites. And the construction sector is now facing a labor shortage, ”deplores Fabrice Moretti, president of the French Building Federation (FFB) of Haute-Savoie.
Annecy and Chambéry, construction in free fall
Demand is still strong in the Pays de Savoie, a region that is still economically attractive, despite the turmoil linked to the Covid-19 crisis …
“The buyers throw themselves on the smallest new program”, notes Olivier Gallais. This is particularly the case in Annecy and Chambéry where between 2019 and 2021, new home sales jumped by 12% and 51% respectively!
But these rising numbers are misleading. “The marketing of new apartments is so fast that the start of new programs is not keeping pace. This means that developers are selling off their stock of homes already built and ready to be delivered, ”he explains.
Result: in Annecy and Chambéry, the number of apartments already built up for sale by almost 30%. And nothing immediately suggests an improvement in the situation, the launches of new programs having fallen by 40% in Annecy and 35% in Chambéry. Conclusion: demand is very strong, while supply is becoming scarce.
Le Genevois, always a separate market
Largely dependent on fluctuations in the Swiss economy, the Geneva real estate market has evolved a little differently from the Chambéry and Annecy basins.
“This market is always separate since the majority of buyers of main residences are cross-border workers and investors are very often Parisians or Lyonnais”, notes Olivier Gallais.
Faced with the uncertainties related to Covid-19, many frontiers have reported their real estate acquisition project, not to mention those who have lost their jobs.
The number of homes sold over the first six months of 2021 has thus fallen by 15% compared to 2019 and the marketing of new homes fell by 16% at the same time. The demand is a little less strong …
“It’s a big brake on the construction of new programs,” he observes. Barely 1,800 homes must be delivered in this area by the end of the year, compared to the usual 2,500. “
On the side of Saint-Julien-en-Genevois for example, after years of euphoria, very few programs are in the pipeline. To find new housing, you should rather look towards Annemasse and Chablais where respectively 350 and 650 apartments should be sold in total by the end of the year.
Unexpected effects on prices
The effects of the economic situation on the prices of new real estate in Savoie and Haute-Savoie are not long in coming. In Chambéry, the average price for new buildings now stands at € 3,695 per m², an increase of 6% compared to 2019. The situation is similar in Annecy, where the average price is € 5,295 per m², or + 3%.
But the FPI des Alpes nonetheless notes a downward trend of 4% over the first six months of 2021. For Olivier Gallais, the explanation lies in the location and nature of the apartments sold: “The available land is increasingly rarer in Annecy itself, developers are therefore building on the outskirts of Seynod, Cran-Gevrier and Pringy. Municipalities where the square meter in the new is negotiated around 4,500 €, against 10,000 € for certain high-end programs built in the past in Annecy. This explains a decrease … which is not really one.
Finally, in Geneva, despite a slightly less sustained demand than before the health crisis, the average price in new buildings continued to rise: € 5,075 per m² (+ 11% compared to 2019).
For Olivier Gallais, the surge in prices in this area has its source in the price of land, which is reflected in the final sale price. “Le Genevois is one of the largest real estate markets in France and arouses the envy of local and national developers. Land speculation is therefore very strong, some land is being traded at crazy prices… that the end user pays a high price! “
A price that could be further increased under the effect of the RE2020 environmental regulations which will impose new construction standards from 2022.
“We will be forced to use materials and technologies that are less carbon-intensive, more qualitative and therefore more expensive. This will have repercussions, in my opinion, on the exit price of new apartments with an increase of 8% to 10%, ”warns Olivier Gallais.
New homes: future price increases
The production of individual houses is in full swing in the Pays de Savoie. Over the past 12 months, 1,100 individual houses in Savoie and 2,000 in Haute-Savoie have started to emerge, ie + 10% in one year, according to the Regional Economic Construction Unit (CERC).
And it is not ready to stop: 2,200 building permits for single-family homes have been granted in Haute-Savoie (+ 11.6%) and 1,400 in Savoie (+ 21%).
“The demand for these goods after the first confinement has been confirmed, analysis Eric Guy, president of the French Building Federation (FFB) of Savoy.” The buyers, mostly couples with two children, have a 120 to 150 m² pavilion built on land ranging from 500 to 800 m². “
On the budget side, the FFB estimates the average cost of a house in the Pays de Savoie at € 1,800 per m² built, or € 216,000 for a house of 120 m². Budget to which must of course be added the price of the land …