While mortgage rates continue to rise, borrowers are struggling to realize their real estate projects. But waiting for better days to buy could prove to be a gamble.
Credit rates at 3% over 20 years on average, inflation still high… at first sight, the current climate is not favorable for a real estate project. According to a survey published at the end of March by the Lafort real estate network, demand fell by 11% between the 1st quarter of 2022 and the 1st quarter of 2023.
A drop in demand which necessarily impacts the number of sales. According to the same study published by Lafort, the decline in transactions is clear in the first quarter of 2023, with a 7% drop in volumes compared to the first quarter of 2022.
Have French households lost their appetite for stone? Those who would have the capacity to finance their project still refuse to compromise by moving towards less expensive or less ambitious projects. They prefer to temporarily withdraw from the market pending hypothetically more favorable conditions, details the Lafort network.
A larger offer to bring competition into play
But should you buy now or postpone your project for several months, waiting for better days? First argument in favor of waiting: the number of goods available is increasing. According to Lafort, the offer increased by 9% between the last quarter of 2022 and the first quarter of 2023even climbing +13% in comparison with the first 3 months of 2022. The network of real estate agencies nevertheless estimates that although it is picking up significantly, it is nevertheless still insufficient to allow both to ensure the necessary fluidity and to significantly stop rising prices.
And things shouldn’t change drastically. The market is structured with, on the one hand, constrained sales (for example due to transfer or divorce, editor’s note) and on the other hand, comfort sales, reveals Thomas Venturini, co-founder of the new real estate agency Liberkeys. The forced sales will take place no matter what. On the other hand, comfort sales, which represent half of transactions in recent years, are going to be hard hit. A seller who repays a 1% loan today is not going to take out a 3% loan just to have an office or a balcony. Nor will he take the risk of selling for less than what he bought.
A major price drop coming?
Nevertheless, it is clear that the current climate has an impact on the prices of goods. The real estate market is currently suspended from the evolution of credit, noted for its part Best Agents in its barometer of April 2023. And since January, it is the whole of the territory which has fallen into the red, with prices down -0.5% on average. While this decline may seem anecdotal, some cities are more stagnant in the first quarter of 2023, the image of Lyon (-3.3%), Toulouse (-2%), Marseille (-1.8%) and Bordeaux ( -1.3%).
Can prices experience a very significant drop? Unlikely, according to various professionals interviewed by MoneyVox. In a December 2022 study on real estate credit, Crédit Agricole relied on prices for the old which would slow to 4.8% on average in 2022 and 2% in 2023.
Real estate credit: find out the lowest rates for your project
For his part, Xavier Timbeau, principal director of the French Economic Observatory (OFCE), estimated that if buyers find themselves blocked, they will probably have to go through a significant price correction, of the order of 10 to 20%. .
Real estate: can you expect lower prices in 2023?
You have to buy when you can buy
Some properties may be subject to a 20% discount, but these are properties classified F and G which will therefore be unsuitable for rental, or which have all possible faults. But the good goods will not have a discount, assumes Thomas Venturini. Still, there’s never a bad time to buy, assures the co-founder of Liberkeys. You don’t know what the situation will be tomorrow. Maybe credit rates will keep going up but prices won’t go down. I think you have to buy when you can buy.
A hunch confirmed by Mal Bernier, spokesperson for Meilleurtaux: I think the situation is better today than it will be in 6 months. Even if the real estate market sees its prices fall by 3 to 4%, this will not compensate for the rise in rates. However, we will quickly see rates of 3.50% over 20 years arrive, or even more in the coming months.
Last argument in favor of buyers: Liberkeys observes that sales times have lengthened by 60% in one year, from 58 to 92 days on average, an extension of 34 days. As a result, the negotiation margins, between displayed price and purchase price, also increased by 88%, from 1.8 to 3.8%.