Experts Talk: the state of the second-home market

From 2020 to 2022, the years of the Covid 19 global pandemic, the real estate market experienced a remarkable trend characterized by a more flexible lifestyle between town and country, a consequence of successive confinements and the introduction of working from home.

Indeed, there has been a significant increase in demand for houses with gardens and swimming pools, apartments with large outdoor spaces, and in the countryside and seaside sectors, a clear prioritization of the living environment whether as a primary or secondary residence. We are also seeing the emergence of the concept of the semi-main residence, where people live for half the year. Halfway between a primary residence and a second home, it's a second home where you don't just spend your vacations, but where you can also work from home.

In 2023, the second-home market has changed: My Sweet Immo dedicates an article to the current situation in this type of transaction, and interviews the Sotheby's International Realty France-Monaco network.

Alexander Kraft, the group's Chairman and CEO, explains that the "Covid" period (2020-2022) has been exceptional for real estate in all its markets (mid-market, luxury and ultra-luxury, etc.); indeed, the sector has seen unprecedented activity, particularly in the traditionally prized second home market.

Today, however, we can see that the high-end real estate segment is reaching a plateau, and this trend also applies to the second-home segment - probably as a result of the current economic crisis, difficulty in obtaining financing, rising interest rates and global political tensions.

Nevertheless, Alexander Kraft explains that this decline in activity is a normal phase of the market cycle after three record years, and remains far less pronounced than among buyers of primary residences, particularly first-time buyers and middle-income households.

What is the reason for this interest in second homes?

While the French are returning to the city to reconnect with a social life and a more active lifestyle, they are also experiencing the desire to escape from time to time by treating themselves to moments of relaxation in their second homes. Alexander Kraft observes a "return to normality" in the demand for second homes, where buyers are above all looking for a haven of peace and tranquillity to counterbalance a city-dwelling professional life with a more peaceful personal life.

Buyers are also aware that acquiring a second home is a good long-term investment. Although this may not be the main reason for buying, it remains an important consideration, especially in difficult times and when inflation is high.

Who is the current buyer?

The pandemic has led to a rejuvenation of the buyer population in the second-home market. Indeed, 30-40 year-olds have invested in this market, which was previously dominated by an older population.

This generation, often associated with Airbnb, prefers to buy turnkey, ready-to-live-in properties, already renovated and thus requiring little installation effort. They are also sensitive to energy-efficient features such as solar power and new technologies that help protect the environment. According to Alexander Kraft, this continuing interest from the French is reinforced by the return of foreigners, particularly Europeans, Americans and, increasingly, Asian customers.

Peter Illovsky, President of Côte d'Azur Sotheby's International Realty, a group of five real estate agencies between Saint-Tropez and Menton, also explains that Americans are back and very present on the Côte d'Azur, which can be explained by two factors: the strength of the dollar and the fact that some consider France a safer place than the United States to make their investments.

Despite a difficult environment and rising interest rates, the market remains surprisingly active, although closing transactions has taken longer and been more complex in recent months. There is in fact an imbalance between buyers' and sellers' expectations: sellers still have expectations based on the year 2022, while buyers are already anticipating price reductions linked to the evolution of the new and traditional real estate market. The challenge, therefore, is to find a reasonable compromise in line with the new market reality, as Alexander Kraft points out.

On the Côte d'Azur, the second-home market is proving resilient

Peter Illovsky explains that the Covid period brought strong activity characterized by a buying appetite focused on properties with outdoor space, sea views or proximity to the sea, etc.

Today, demand is back to pre-2020 standards. However, the real obstacle is the difficulty in obtaining financing due to rising interest rates and the reluctance of banks to finance foreign customers, which is slowing down the sales process.

While 2023 is not as dynamic as the "Covid years", this does not mean that prices are falling either. Nice, the capital of the Côte d'Azur, is a perfect example, with prices per m² continuing to rise.

As our President explains, the Côte d'Azur market in Nice is surprisingly strong, with prices rising for both primary and secondary residences.

For all your real estate investment needs on the Côte d'Azur, contact the Côte d'Azur Sotheby's International Realty agency in the area that best suits your desire for peace and quiet on the Côte d'Azur:

Côte d'Azur Sotheby's International Realty - Nice

Côte d'Azur Sotheby's International Realty - Cannes

Côte d'Azur Sotheby's International Realty - Saint Tropez

Côte d'Azur Sotheby's International Realty - Beaulieu sur Mer

Côte d'Azur Sotheby's International Realty - Saint Jean Cap Ferrat

info@cotedazur-sothebysrealty.com

+33 (0)4 92 92 12 88