Morose atmosphere early in the morning, this Tuesday, May 30, in the small circle of Notaries of Greater Paris, at the announcement of the statistics of the Ile-de-France real estate market. The numbers are not good. Sales of old homes in Ile-de-France collapsed by almost a quarter (−22%) in the first quarter of 2023, over one year. In the continuity of the 3e and 4e quarters of last year, the decline continued and accentuated, to the point that sales volumes fell below the average of the last ten years, for most markets.
“Paris no longer resists”, observes Thibault Gallot-Lavallée, notary in Neuilly. The capital, which experienced exceptional activity in 2022, is now down ” very strong “ 18% on 1er quarter, over a year, with only 8,000 sales. The Ile-de-France old house market, the most dynamic since the health crisis, fell by 25%. “In the small crown, all the numbers are in the red”warns the notary. “Previously, the home market was cyclical, activity should have picked up in the spring, but now it is falling”notes his colleague, the Parisian notary Thierry Delesalle.
“It’s a real shock this quarter, comments to the press the president of the statistical commission of Notaries of Greater Paris, Elodie Frémont. A change of era for the real estate market, the consequence of financing that is difficult to find. »
Rates raised at an unprecedented rate
The financing system began to seize up when the European Central Bank raised its rates at an unprecedented rate in the history of the monetary institute, to fight against the return of inflation. The banks have passed on these increases: the average mortgage rate fell from 1.06% in December 2021 to 3.15% in April 2023, with considerable repercussions on the budget of buyers. “Our simulations show an increase in July 2023 of 19% in the monthly payment for the purchase of an old apartment and 23% for that of a house, compared to the situation in January 2022”indicate the Notaries of Greater Paris.
They also deplore “Files that are sometimes not examined by the banks and an increase in credit refusals”. Between the market rates, at which the banks refinance themselves, and the credit rates they can offer to customers, taking into account the rate of wear and tear, home loans are of much less interest to them than in the past. “Before, the mortgage was a loss leader for the banks, today they favor the collection of deposits, to safeguard their profitability”, testifies Christian Godard, notary in Claye-Souilly (Seine-et-Marne). And Thibault Gallot-Lavallée to cite the example of an establishment in the South-West, “which has halved its loan volume targets for 2023”.
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