“Paris suffers”but the capital is no longer an exception: “the tension” of the real estate market can now be observed at the national level. Main network of agencies in number of transactions, Century 21 published, Monday, June 26, a report for the first half of 2023 which establishes the change ” radical ” of the situation of the real estate market in France. “Activity, which had been flourishing for eight years, has suddenly slowed down: – 14.1% between the first half of 2022 and the first half of 2023”notes the sign.
This market reversal is explained by the strong and rapid increase in interest rates, under the impetus of the European Central Bank (ECB), which has thus sought, since the start of the war in Ukraine, to fight against inflation galloping. The average mortgage rate (excluding insurance) fell from 1.06% in December 2021 to 3.28% in May, according to the CSA Housing Credit Observatory, considerably reducing the borrowing capacity of households.
This increase, combined with inflation, weighs heavily on their real estate purchasing power. “Compared to July 2022, households are experiencing a desolvency of around -18.4%”note Century 21. And according to the credit broker Meilleurtaux, in six months, between January and June, the French would have lost on average the equivalent of 5 square meters in the twenty largest cities of France.
Notaries, real estate agents and economists agree: this drop in buyers’ budgets must be offset by a substantial drop in real estate prices so that the market continues to turn. In a note published on May 30, the think tank Terra Nova even estimates that the rise in interest rates will cause a decline in property prices. “around 20%, at a constant rate environment”. What would be “good news from the point of view of wealth and intergenerational inequalities”continues the think tank.
“Historic record” for houses
For the first time since 2017, the average price per square meter of apartments fell at the national level, in the first half of 2023 (– 1.7% over twelve months, to reach 4,198 euros per square meter), according to figures from Century 21. But this fall remains timid, and prices even continue to rise (+0.9%) for houses, to the point of reaching “a historic record”.
However, the prices evolve in dispersed order on the territory, following a logic of supply and demand, and against a backdrop of“heterogeneity of territorial trajectories since the health crisis”as highlighted in the analysis note “Urban exodus: a timid greening” published in June by France Stratégie.
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