As 2022 kicks off, we have noticed the early signs of the market moving towards a seller’s market. This article addresses the specifics of a seller’s market and how to work it to your advantage.
What is a Seller’s Market?
An expression commonly used in the real estate sector, the term “seller’s market” refers to when the demand for a product is greater than its supply – in this case, when there are more buyers looking for properties than there are owners selling their properties. It is the opposite of a buyer's market, in which excess properties on the market versus interested potential buyers means the buyers have the power in terms of setting terms and prices.
Why is it a Seller’s Market on the French Riviera?
To determine why we are currently in a seller’s market on the French Riviera, we must take a closer look into what recent events have affected the local property market. As you can imagine, we needn’t look too far before mentioning the pandemic. As the region went into its first lockdown during Spring 2020, the world and its friends succumbed to a daily dose of doubts, fears and endless questions regarding what was going to happen next. Despite the wonderful micro climate that the French Riviera truly is, it could not avoid these times of uncertainty and just like every other sector and industry, the real estate market was hit severely. The team wrote an article at that time about what to expect post-crisis, which you can read HERE.
As correctly predicted, the local real estate market did not collapse. It did slow down at first as both buyers and sellers re-emerged warily to pursue their real estate projects. This was then followed by a surge in match-making heaven as more buyers wanted to buy and more sellers wanted to sell. The most sought-after properties were those with outside space – anything from a small balcony to a rooftop terrace or a garden included with the property. During 2021, many of these properties were being purchased by avid buyers at a fast rate. Due to the ongoing restrictions, these buyers were predominantly French from Paris or further North, looking for a place in the sun – a wave of clients justified by not wanting to live in the same conditions as many of us underwent during the first lockdown. Then, as the restrictions lessened towards the end of 2021, a second wave of clients – this time including a good proportion of foreign buyers, mainly European – arrived with the sole intention of purchasing a property on the French Riviera.
These waves of buyers were more than welcome after such uncertain times. They came, they saw, they bought. However, as the number of buyers increased, the number of available properties for sale could not keep up and has now decreased to the point where there is a shortage of properties on the market.
What to expect from a Seller’s Market?
In the midst of a seller’s market, the lack of properties has several knock-on effects. Here are the main ones to look out for:
• Higher priced properties as prices are pushed up because of the ratio between a high number of buyers and a shortage of properties for sale
• Properties sell faster and buyers are less picky as, for the most part, they would rather avoid losing an opportunity to purchase
• Less properties for sale means less choice
• Increased competition between buyers
• Quicker decision-making when considering putting on an offer
It is worth noting for buyers who are used to bidding wars in their own countries (i.e. UK) that bidding wars are forbidden in France as properties cannot be sold higher than the price they are advertised at..
How to buy in a Seller’s Market?
Once you are able to determine what kind of market you are in, you can choose at what angle to approach it. The following are some key insights that will hopefully help you on your real estate journey.
First, consider being more flexible with your search criteria. Due to the shortage of properties in a seller’s market, you will automatically have less properties to choose from, so being too specific with your criteria will decrease your options even more so. Also, you could expand your search location in which you wish to purchase your property. Depending on your project, there are some very good opportunities for secondary homes and rental investments when you look further afield from what you initially had in mind. We would also recommend you clarify how you will finance the purchase before starting your property search. This way, when you decide to make an offer on a property, you may very well be ahead of any competing offers if you already have a financial broker or a bank confirming your financing. Finally, make your best offer straight away. If your mind is set on a specific property but you wish to start with a low offer, you may in fact open the door to the owner receiving better offers from competing buyers.
As a buyer considering to purchase a property in a seller’s market, it can be quite demotivating when confronted by such a frantic market. At the time of writing this article, the record low interest rates have also begun to increase. This increase has enticed buyers to buy sooner rather than later, therefore adding to the urgency to buy now. Our advice is to have patience in abundance. Think everything through. Only you can and should decide whether to pursue a purchase or not. Keep in mind, however, that a seller’s market with its heightened competition also comes with its opportunities. The value of working with a real estate agency that willingly collaborates with other agencies, thus increasing your options to view as much of what the market has to offer as possible, mustn’t be underestimated. Building trust with a real estate agent can go great lengths in securing the property you are after whilst reassuring you every step of the way.
The Nice Homes Team
16th March 2022