To predict the future, we must reflect on the past. We must first examine what happened to the real estate market in the years 2020 and 2021.
2020 brought us the unprecedented onslaught of the COVID-19 pandemic. This was a colossal leap into the unknown for everyone! People were legally required to remain in their homes for up to 23 hours a day! Those affected the most by the severe restrictions were the people living in small townhouses or cramped city apartments. This lead to a demand for spacious homes near the coast and countryside. Something the big cities do not offer. It was intriguing to witness the opposite of what we predicted. The new restrictions and uncertainty did not affect the capacity of those wanting to buy! The number of homes sold during the pandemic on the French Riviera was increasing - in all budget categories!
In 2021 people were beginning to adjust to living with a pandemic. With the knowledge of Covid-19, the precautions and mechanisms became automated across the world. With this new insight, the threat to personal liberties and freedom became diminished in many areas of the world. The result was that overall buying interest decreased. Much of the demand was coming from potential buyers who were dreaming of a home on the coast. But many lacked the resources and funds to fulfill their dreams. This meant that our consultants could spend more of their time helping buyers who did have the funds to make a serious purchase.
The sale of homes declined towards the end of 2021 and the following reasons allow us to imagine a prognosis for 2022. Firstly, many buyers have already fulfilled their need for a new home in the first wave of the pandemic, combined with the relaxed restrictions of freedoms, reduced the level of urgency to change residence.
Our prediction for 2022 sees the trend experienced at the back end of 2021 will continue. This is due to the scientific confirmation that variants of the virus are less dangerous than were expected, in combination with the global vaccination effort that has relieved a lot of stress surrounding travel and business operations.
However, for the French Riviera - the combined effect of supply and demand has had the greatest impact. Demand for homes has decreased, but so has supply. The number of homes available on the market (supply) has decreased due to the influx of sales seen in 2020 and 2021 together with the increase in owners reluctant to sell during a time of economic fragility. Owners are feeling that it is better to stay put - rather than sell and enter into a period of uncertainty. This implies that it will be very difficult for us to replace homes on the market that were sold in both 2020 and 2021. This low supply of homes implies that we are likely to see an increase in property prices. Inflation has begun to reach proportions not known for years and has had a knock-on effect on the cost of materials, labor, and the overall cost of constructing new properties - and renovating existing homes.