While professionals in the sector have been warning for several months about a housing crisis in France, the government seems to have had an awareness and could announce new solutions at the beginning of June to revive the sector. So, communication plan or real desire to make things happen?
A number of loans granted down 31.9% over one year according to the CSA Housing Credit Observatory. An average credit rate over 20 years which has now reached 3.30% and first-time buyers increasingly being pushed aside. Sales in free fall in the old (-15% in March 2023 compared to March 2022, according to Meilleurs Agents) as in the new. Not to mentiona tight rental market up 68% on average between 2021 and 2022 according to the real estate site Bien’Ici. Faced with all these figures, a question arises: Is France going through a housing crisis?
In presenting her roadmap for the next six months, on April 26, Prime Minister Elisabeth Borne agreed that among the greatest concerns of our fellow citizens is also housing.
Two days later, on the set of BFM TVHousing Minister Olivier Klein did not take so many tweezers to name the current situation, assuring that since November, I’m talking about this housing crisis, I’m talking about the social bomb. And for several weeks, the Minister of the Economy Bruno Le Maire has multiplied the announcements of exchanges with the Governor of the Banque de France about the difficulties of access to real estate credit.
Among the strongest concerns of our fellow citizens is also housing.
While professionals in the real estate and housing sector have been alerting the government for several months to the difficulties encountered, this communication is seen as good news. This ministerial awareness is a bit late, even if we can congratulate ourselves that it has taken place because it is necessary. At the same time, it is difficult at this stage of not realizing the gravity of the situation, so many problems accumulatejudge Henri Buzy-Cazaux, president of the Institute of Management of Real Estate Services and former adviser to the former housing minister Pierre Mhaignerie.
Rising interest rates hurt household budgets
How to explain the problems encountered? The real estate transaction sector is now strongly impacted by the rise in interest rates, which cuts into the budget of households wishing to buy. On average, 1 point of rate increase corresponds to a loss of borrowing capacity of 10%recalls Pierre Chapon, co-founder of the broker Pretto.
While the rates have risen in just over a year from 1% to 3.3% over 20 years, it is difficult for buyers to follow. Especially since the decline in real estate prices, if triggered, does not follow the same proportions. For example, the prices of goods in Paris have only fallen by 5.1% over one year according to the website Meilleurs Agents.
The rental market is no exception. Last September, the Particulier Particulier (PAP) website pointed to an increase in rental demand, of the order of +9% of candidate tenants compared to 2019. And the tension is very high today in many cities in France.
Rental: why it is increasingly complicated to find rental accommodation
According to Latitia Caron, General Manager of Particulier Particulier (PAP), this increase is partly explained by the impossibility for the youngest borrowers to access the purchase: Usually, there is a flow on the rental market which makes that around their thirties, when young employees begin to settle professionally, they will take action for a first real estate purchase. Today, there are some of these first-time buyers who do not take action and therefore who do not let go of their location. There is a phenomenon of postponement from first-time buyers to rentals, confirms Henry Buzy-Cazaux. Those who are unable to buy weigh in on the rental market.
An extension of the PTZ in 2024
All of these problems weigh on the real estate sector. According to the French Building Federation (FFB), 100,000 jobs would be threatened in the sector by 2025. A risk that worries in high places, according to Henry Buzy-Cazaux, for whom this consequence on employment is what can make the Minister of the Economy and the Prime Minister move. The latter has already announced an emergency measure for the new sector, with the purchase by the Caisse des Dépts of new homes that developers are struggling to sell.
What other solutions are being considered? Olivier Klein welcomed a few days ago the extension of the Zero Rate Loan (PTZ) in 2023, explaining that it allows our fellow citizens to have a kind of contribution. For acquisition, it is an extremely useful tool, even more important in times when interest rates are high.
If no official extension has yet been announced, the entourage of Prime Minister Elisabeth Borne has announced that the PTZ would be extended at least until the end of 2024. In what form? We are working to see how it will be maintained in a tight zone because we need to produce housing where it is most needed, assures Olivier Klein, without saying more.
Towards new rules for mortgage loans?
The second axis put forward by the government concerns real estate credit. After having already made a gesture by monthlyizing the rate of wear, Bruno Le Maire must now discuss a relaxation of the conditions for granting credit with the governor of the Banque de France, Franois Villeroy de Galhau.
While the High Council for Financial Stability (HCSF) has imposed since January 1, 2022 a debt ratio of 35% for households as well as a loan period not exceeding 25 years (27 years in certain cases), banks can now override these rules in 20% of cases. And for the Governor of the Banque de France, the banks are far from the mark since this flexibility is only partially used today by the banks, 14.5%.
A real estate loan soon easier to obtain? The Banque de France refuses the easing
In this context, the Minister of Housing is therefore appealing to the banks. They are now cautious, too cautious, argues Olivier Klein. I’m not saying that we have to send the French back to over-indebtedness, we have to be careful and the residential path is not only made by acquisition, there is also social housing and rental. But we must tell the bankers that there are possibilities to be less cautious on certain issues, to use the leeway available to them. We tell the bankers that we need them. For Henry Buzy-Cazaux, in the 20% of drugs, it would be necessary for example to give a larger share to first-time buyers.
Today, we have very alarming figures on the production of credits, confirmed by his side ric Debese, founder of the network Made In Courtage who published in May a white paper containing several proposals for a credit policy in favor of the real estate. The entire espre real estate production chain that the Minister of the Economy will take decisionsdespite the reluctance of the Banque de France.
Among the proposals put forward, we find for example the fact of increasing the maximum duration of loans to 30 years for all projects to acquire a principal residence, in particular for first-time buyers, but also a return to the offset calculation method for rental investments. In other words, professionals want rental income to be included in the calculation of the debt ratio.
The return of loan interest deductibility?
Henry Buzy-Cazaux also puts forward another measure: the deductibility of loan interest. This measure has already proven itself until 2010, judges the latter. When they were extremely weak, deducting them didn’t do much. Today, this could once again become a powerful measure that restores purchasing power to households.
An opinion shared by Grgory Monod, president of the housing unit of the French Building Federation (FFB) who is asking for new real estate the introduction of a 15% tax credit on the first five loan years which will be able to offset the impact of the 2020 environmental regulations, which come into force at the start of 2022 and which aim to decarbonize housing construction.
New real estate: this new standard will make the price of your house jump
What solutions will be adopted? While the conclusions of the National Housing Refoundation Council (CNR) were to be delivered on Tuesday, May 9, 2023, the postponement was postponed to a later date due to an agenda constraint beyond our control, announced to know the entourage by Christophe Bchu, Minister of Ecological Transition and Territorial Cohesion. The conclusions of the CNR Logement should finally be presented on Monday, June 5, 2023.
But whatever the proposals, everything should not work out overnight. For the moment, nothing has been put in place. There is a legislative timeline, so I think the new measures will not arrive before January 1, 2024, regrets Henry Buzy-Cazaux. We have a problem of temporality: that of households is not that of the law. Are we going to be able, before the end of the year, to improve the daily life of households in a strong way on the question of housing? Unfortunately, I think not.
Some solutions are proposals that can be discussed at the next meeting of the HCSF and which can be applied almost immediately, judge Eric Debese. A modification of the HCSF standards would have an immediate effect on credit and therefore on the real estate market in its entirety.