A house on the Basque Coast, at any cost!
With over 55 million euros in real estate transactions generated in the first half of the year by the agencies in Biarritz, Saint-Jean-de-Luz, and Hossegor, the market demonstrates a consistently audacious form.
The figures speak for themselves:
- Increased demand: the Basque Coast attracts a wealthy clientele for both primary and secondary residence projects.
- + 175% increase in searches for the Basque Coast on major specialized real estate websites in 2 years (Pretto study).
- Clear interest in luxury real estate. Searches on the BARNES Côte Basque website have doubled over the same period, rising from 20,000 to 40,500 unique users per month.
- A consistently significant portfolio of sales mandates, but which is shrinking like snow in the sun: a number of mandates comparable to previous years, but with an extremely shortened marketing duration, our portfolio of active mandates has halved.
“This great dynamism in the number of sales highlights the asymmetry between an increasingly significant demand and a sharply declining (residual) supply. The number of properties for sale is relatively constant, but the marketing duration decreases significantly, amplifying this impression of supply scarcity,” explains Philippe Thomine-Desmazures, Associate Director of BARNES Côte Basque.
Despite the temptation to make a nice profit, opportunists hesitate to sell in this crazy market: many cautious “seller-buyers” increase pressure on the market, preferring to find a new property before selling theirs, which results in further scarcity of supply… to calm the market or to put it under even more pressure?
“The optimism prevailing in the financial markets, in the face of a strong economic recovery, is driving stock prices to record levels, generating capital gains that can be reinvested, particularly in real estate,” observes Philippe Thomine-Desmazures. Indeed, real estate remains the main focus of interest for the French, regardless of the size of their wealth, the geographical location sought, or the purpose of the real estate investment (heritage, primary residence, or secondary residence).
“The same causes produce the same effects, and since July 2020 we have observed a price increase of 17% in Biarritz. The same observation applies in comparable proportions across the entire Basque Coast. The current motto seems to be ‘buy a house (or an apartment) on the Basque coast, at any cost,’” he adds.
This game of musical chairs between sellers and buyers is all the more complex as it is unbalanced. Many more participants than chairs. The newcomers are numerous, facing a negligible creation of new housing. The relative conservatism in local urban planning policies has the merit of offering a still relatively preserved landscape and a low housing density across the Basque Coast… but this is at the expense of creating housing for the less affluent, who are pushed further away from the coastal towns and villages. This has generated some social tensions in recent months, particularly against Parisians, who have become, like real estate agencies, scapegoats for the situation.
“We understand the reasons for these social tensions for those less fortunate in this ‘Basque housing crisis.’ While our role as intermediaries is to connect supply and demand, we can only observe the rising prices. It would be presumptuous to think that we could influence the evolution of the market,” comments Philippe Thomine-Desmazures.
A very particular seasonal rental market
On the side of seasonal rentals, which remains an important activity for BARNES, a double asymmetry is observable:
- A lack of tenants in July: difficulties for foreigners to travel to France (or to return home without quarantine) dry up a significant portion of the demand from this usually important clientele in July. Many beautiful rentals remain vacant, despite more attractive prices.
- An increased shortage of rental supply in August: the French, mainly “August vacationers,” are traveling less abroad than before COVID and are concentrating in France (especially on the Basque Coast) during the second half of summer: renting a house in the Basque Country in August, at any cost!
The seasonal rental profitability is still significantly more attractive than that generated by traditional rentals, benefiting from a more advantageous tax regime.
Municipalities, such as Biarritz, limit rental investments by allowing each tax household to rent only one property… per municipality. This limits investors' interest but does not diminish the attractiveness of the region.
“Our crystal ball for understanding the real estate market in the coming months seems to offer more clarity in this positive context, with vaccination, growth, and moderate political prospects providing a very favorable context. The only small downside on the horizon: the scarcity of supply cannot help to moderate the rise in prices. With the recurring refrain: can prices continue to rise?” concludes Philippe Thomine-Desmazures.
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