2023-09-10 09:48:53
In the space of a year, the French real estate market has been turned upside down, going from stability to crisis. Between plummeting lending rates and a collapse in transaction volume, the sector is in turmoil. But behind these figures lies a more complex reality, made up of political decisions, geopolitics and ecology. And everything seems to indicate that the descent is not about to stop.
The real estate market in decline
The rate of granting real estate loans therefore continues its downward trend in France. In August, it fell to 43.2%, according to data from the Crédit Logement/CSA Observatory. This drop is due to the significant increase in interest rates, from 1.82% to 3.8% in the space of one year. As a result, real estate sales declined due to the inability to finance such projects. According to forecasts from the National Real Estate Federation, the number of transactions this year is expected to amount to just 925,000, compared to 1.2 million in 2021.
According to real estate economics specialist Michel Mouillart, this turnaround is not unexpected. According to him“it is the result of decisions taken in 2019 with immeasurable perverse effects”. He explains that “the market started to deteriorate in the fourth quarter of 2021. In 2022, real estate activity slowed down. That is to say, the volume of transactions and the number of credits granted have decreased. Since then, everything has deteriorated at a comparable rate. On the other hand, the deterioration is accelerating in the construction of individual houses.”
Lowering interest rates won’t solve the problem
According to specialist Ingrid Nappi, this crisis is not only due to geopolitical problems, like the war in Ukraine. The expert mainly raises the question of the ecological transition which has significantly slowed down the development of the real estate market. “The question of urban ecological transition, essential in the face of global warming, requires adapting the mode of housing production […]. A real transition is underway. But it takes time”she explains.
At the same time, she recalls that a good number of French people have given up taking out a mortgage following the new requirements of banks, called by the High Financial Stability Council to be more vigilant regarding the solvency of their customers. The solutions, according to Ingrid Nappi, must therefore be “ policies “. She believes that “this accumulation of phenomena pushes us to review better regulation of the occupation of the real estate stock”.
Michel Mouillart emphasizes, for his part, that even if “in 2024 real estate loan rates will fall again, this does not mean that the real estate markets will pick up again”. For Ingrid Nappi, a return to normal is possible, but it may take time. “The market will regulate itself, but it will take time. We must not underestimate the psychological dimension of real estate. For a seller it takes more time to accept that prices are falling than the other way around. she warns.
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