2023-12-04 05:31:00
the essentials Concern about the real estate market is growing at all levels. On the construction of new housing, sales of new properties, the rental market, real estate loans: all the lights are red and some fear this “social bomb” if strong mobilization is not put in place in favor of housing .
The real estate market is still in crisis mode and is sinking deeper into crisis according to the various indicators published in recent weeks. The Federation of Real Estate Developers published on November 17 the figures from its 3rd quarter observatory for new real estate throughout the national territory and the situation is clear.
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“National indicators show no sign of a favorable turnaround in the real estate situation. If the trend continues, fewer than 90,000 homes will be sold in 2023,” summarizes the FPI. “From cyclical, the crisis becomes structural. The number of new homes put up for sale in the 3rd quarter of 2023 collapsed to 12,039 (-48.6%): this is the worst quarter since the creation of the Observatory in 2010. The number of new homes put up for sale down by half compared to the 3rd quarter of 2022, and 30.8% since the start of the year. This new observation only confirms the catastrophic situation in which many promotional companies find themselves, forced to abandon the commercial launch of their operations in view of the situation of demand from individuals. »
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From one shortage to another
As for FNAIM, the November real estate barometer shows that “the predicted crisis has now become reality. The quadrupling of interest rates in two years has taken a toll on market dynamics. The number of sales of old homes has fallen significantly to 955,000 sales over 12 months to the end of August 2023 (i.e. -17% over one year), and prices have declined and are falling slightly. Inflation has fallen slightly but remains high: 4% in September 2023. The market is now more favorable to buyers,” estimates the FNAIM in its economic report.
“Overall, the housing market has gone from one shortage to another: with the blockage of the transaction market, the shortage of properties for sale has subsided but has transformed into a shortage of properties to rent. Against the backdrop of an insufficient supply of housing, particularly in certain tense areas. Public support measures capable of responding to the difficulties encountered are more necessary than ever,” believes the FNAIM, which deplored “yet another missed opportunity for housing” in the 2024 finance bill, which it considers insufficient.
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The credit problem
The FNAIM is also alarmed about the number of real estate loans, for which the governor of the Bank of France, François Villeroy de Galhau, has just called out the banks. “In connection with the slowdown in volumes, the production of credits has been falling significantly since June 2022. The production of credit is suffering not only from the drop in sales in old properties and the fall in new properties, but also a reduced recourse to credit on the part of borrowers. Mortgage rates continue to rise. At the end of October 2023, property loan rates rose to 3.48% according to figures from the Banque de France (and 3.84% excluding credit renegotiations). According to the Crédit Logement/CSA Observatory, they even increased from 1.1% in February 2022 to 4.12% in October 2023, an increase of 3 points. »
Consequences: “the drop in sales over the whole of 2023 should be at least 20%, which would correspond to around 885,000 sales. The number of transactions would therefore fall back below pre-Covid levels, and would go back more than 6 years. Above all, this would be the largest drop in sales over one year ever observed in more than 50 years. A major shock for the real estate market,” warns the FNAIM, which notes that “on the new property market, sales have collapsed for 18 months, and are at their lowest since 1995.”
“The inflationary context has mechanically impacted the purchasing power of the French and with a reduced borrowing capacity, the purchase of real estate has become extremely complex, even more so for first-time buyers whose income levels are no longer sufficient today. “today we can foresee a purchase”, note for their part the Notaries of France. “Arbitrations are made to the disadvantage of real estate acquisition with regard to the remaining lives of the French. The announced price adjustment is timidly getting underway, sellers not yet accepting a substantial drop in their price, more in touch with the economic reality of the market, even if this idea is starting to move forward, in view of more open negotiations , in favor of the purchaser.
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