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While household real estate purchasing power is falling, rental power is reaching new heights. However, the trend could soon be reversed. Explanations.
Rental power hits record high
The rental power corresponds to the number of m² that a household can afford, with equal income.
Real estate purchasing power is calculated by dividing the borrowing capacity of households by the average selling price.
According to SeLoger, while the real estate purchasing power of the French is reduced under the combined effect of real estate prices which are reaching very high levels in many cities and borrowing rates which are rising again, the rental power of the French , he has never been so consistent since the beginning of this century. Indeed, it appears from the analysis carried out by SeLoger that the rental power, which depends on the income received but also on the level of rents, currently benefits tenants. The area that can be rented in 2022 has thus reached a record level.
The average rental power of a French household is 77 m²
Thus, the study shows that the average rental power of a French household reached its highest level since 2001 with 77 m². It has been rising continuously since 2014, when the rental power was 68 m². This represents an increase in rental capacity of 12.2%.
Among the 50 largest cities in France, it is in Bourges, Le Mans or Quimper that a household can rent (for an unfurnished rental), with equal income, the largest number of square meters, with respectively 84 m², 85 m² and 93 m². Conversely, Roubaix (with 36 m²), Paris (with 46 m²) and Nice (with 50 m²) are the three cities with the lowest rental power.
Incomes that increase faster than rents
How can this dynamic of rental power be explained when real estate purchasing power is at half mast? The explanation lies in the rate of increase in rents and income. Indeed, French incomes are increasing faster (+18%) than rents (+5.1%), held back by the IRL (Reference Index of Rents). This index, published by INSEE, only increased by 3.49% between the third quarter of 2022 and the third quarter of 2021.
However, the trend could soon be reversed due to the new Climate and Resilience law which provides that dwellings whose DPE (energy performance diagnosis) is classified G will become unsuitable for rental in 2025 and those classified F in 2028. renovation, the 1.6 million F or G classified housing rented in the private sector can no longer be rented. This is causing a boom in the sale of energy strainers and the scarcity of properties offered for rent.
Thus, “the average rental power has experienced a much less strong evolution for 1 year (+ 0.8%) and stagnates around 77 m². Is this the sign of a change in dynamics? Could the rental power drop, leading to a reduction in the number of m² to which the French could claim? It is still too early to tell,” explains Barbara Castillo Rico, Head of Economic Studies at SeLoger.