According to a study by Virgil, first-time buyers wanting to buy Paris or the inner suburbs of Paris lose an average of 38% of living space compared to a rental property.
How many square meters are you willing to sacrifice to become a homeowner? Paris and in the inner suburbs, if you are a first-time buyer, the average sacrifice represents 38% of living space, i.e. a room of 11m2. This is revealed by Virgil, a company that helps young working people access property, in a study (1) publishes this Friday, February 17. The latter notes an ever greater loss for young Parisian buyers. While in 2022, the loss of surface area between a rental property and the purchase was 26%, or 7m2, the gap widens in 2023: -28% of surface area, or 11m2 less, the equivalent of a pic.
We hear that young people don’t want to be owners, but in fact, it’s a strong choice because young people have to sacrifice square meters to access property, explains Saskia Fiszel, co-founder of Virgil. In 2022, candidates for purchase were already losing 26% of living space, or a quarter, which is already a lot. This year, we are 38%, or 11m2, it’s a nice room less.
Up to 47% loss of living space in the center of Paris
Let’s take an example. A young worker, with a gross annual income of 40,000 euros, or approximately 2,550 euros net, can rent a 31m2 apartment in the 19th arrondissement of Paris. If he is looking to buy, and therefore convert his rent into monthly payments, he cannot, given the current prices and credit rates, claim that a property of 19m2 in 2023against 24m2 in 2022. In question, notes Virgil, the rise in borrowing rates, from 1.5% to 3.04% in February 2023, degrading the budget for first-time buyers and their chance of obtaining a loan.
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Logically, the loss of surface area on purchase is even more pronounced in the most central districts of the capital. Thus, a buyer will lose up to 47% of living space compared to a tenant in the 1st arrondissement, 46% in the 7th arrondissement and 44% in the 6th arrondissement. Conversely, the municipalities of Aubervilliers (-13%), Bagnolet (-14%) and Ivry-sur-Seine (-19%) are those where the difference is the least significant.
Rising rates mean that credit is becoming more and more complicated for first-time buyers, with borrowing conditions that are restrictive, while young people want to become owners, assures Saskia Fiszel. We see that the rise in interest rates makes it more and more difficult to buy, it means sacrificing more and more things. However, it must be done because we know that rates are rising, but we don’t know how far, or if prices will fall and by how much.
(1) To calculate this index, Virgil used the rental prices per m2 from the seloger database and the purchase prices per m2 in the old building from the Notaires de Paris database. on the basis of a gross annual salary of 40,000 euros. Also taken into account, the increase in rent estimated at 3.5% and the average interest rate of 3.04% on 25-year mortgages.