Falling sales in both new and old properties, difficulties in accessing real estate credit… The real estate sector is currently experiencing many difficulties, and many professions are suffering from it.
A number of loans granted down 41% over one year, and inevitably, a falling number of transactions. Over the first 8 months of 2023, according to FNAIM, sales fell by 21% compared to the same period in 2022. The drop in sales over the whole of 2023 should be at least 20%, for approximately 885,000 sales over one year. This is no longer a surprise: since the rapid rise in mortgage rates, the real estate sector has experienced many difficulties.
But behind these figures, which inevitably impact borrowers, lies another reality: many professionals are forced to close shop or change jobs. Thus, Grgory Monod, president of the Housing Unit of the French Building Federation, explained a few days ago to the Parisian to fear a loss of 125,000 jobs in construction alone, 250,000 for the entire real estate sector.
Housing built means one and a half jobs created or maintained
Housing built means one and a half jobs created or maintained, says Henry Buzy-Cazaux, former general delegate of FNAIM and real estate specialist. If we stop building new housing, due to lack of demand, we are inevitably heading towards the destruction of many jobs. However, according to the Minister of Ecological Transition, individual reservations fell by 40% in the second quarter of 2023.
690 business failures in 2023 in individual construction
The first impacts are already being felt. According to the Altars firm, which publishes its study every quarter on business failures and safeguards in France, the number of business failures among real estate developers is 93 over the first ten months of 2023.
But builders of individual houses are far more impacted. Builders have already had problems completing certain projects due to the explosion in the price of materials, explains Henry Buzy-Cazaux. And today, the order books for individual constructions are no longer filling, in particular because of the exclusion of individual houses in the future PTZ. Still according to the Altars firm, there were 624 failures of individual construction companies in 2022, and 690 in the first ten months of 2023.
And the new real estate sector is not the only impact, old real estate is also experiencing a decline in the number of transactions. The latest LPI barometer, published on November 28, shows at the end of October a decline of 26.2% in sales measured on a rolling quarterly level. With a market down 25%, there is necessarily a need for fewer professionals, confirms Henry Buzy-Cazaux.
Still according to the Altars firm, 680 real estate agencies were in default over the first 10 months of the year. And according to Henry Buzy-Cazaux, this is only the visible part of the iceberg: Commercial agents risk acting as an adjustment variable. Most real estate agents are not salaried and are therefore invisible in the statistics, explains the president and founder of the IMSI real estate school. According to an article from Parisianaround 10,000 independent agents have already stopped their activity since the start of the year.
Layoffs among notaries and real estate agents
Notaries are also one of the professions affected by the real estate crisis, a sector which brings their activity to almost 57% on average, according to a figure from the Competition Authority. An article from things cites the example of a notary based in Suresnes, in Hauts-de-Seine, who explains that his firm suffered a loss of turnover of 27% compared to last year and has already laid off 20% of the workforce .
Finally, brokers are not immune to the general gloom either. With rates rising from 1% to 4.5% on average between January 2022 and November 2023, many borrowers no longer have access to real estate credit. Compared to January 2022, we are rather -20% in number of requests, which generally corresponds to the drop encountered on the transactional market, notes Mal Bernier, spokesperson for the broker Meilleurtaux, who however believes that the return of banks to the market real estate credit is synonymous with better days to come.
Real estate credit: for relaxation, borrowers will still have to wait
If brokers are therefore hoping for a rapid improvement, new real estate players are preparing for a long-term crisis. The peak of the crisis is estimated to be 2024, confirms Henry Buzy-Cazaux. When we talk about new construction, we know two years in advance what will happen. However, if developers are unable to sell off their current stock, they do not restart construction, do not buy land or submit new building permits. These indicators therefore show that the situation will not improve in the near future.
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