Categories: Business

Prices of old houses are falling

After a three-year boom following the Covid-19 crisis, property prices have continued to decline. Thus, in the fourth quarter of 2023, older property prices have fallen by 4% year-on-year, according to the benchmark Notre Dame-Ince index published this Thursday. The decline is all the more stunning because prices were still rising 0.5% in the second quarter of 2023.

In detail, according to provisional data adjusted for seasonal variations, the price decline concerns both apartments (-4.1%) and houses (-3.8%). Note that notary calculations, based on final sales and not sales contracts or advertised prices, are a few weeks behind market trends, but are more complete.

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Differences between regions

The decline is particularly strong in Ile-de-France, with an annual decline of 6.9% compared to an average of 2.9% in other French regions. A reduction that continues at the same rate for apartments or houses.

Above all, Île-de-France is facing a new phenomenon: prices are now falling in comparable proportions not only in Paris, but also in inner suburbs and outer suburbs. Regarding Paris Intramural, the most expensive district, the 6th, falls below 14,000 euros per square meter. The most affordable, the 19th, goes under 8,000 euros per square meter.

In contrast, the Provence-Alpes-Côte d’Azur region largely escaped a decline of only 0.6%, in contrast to Hautes-de-France (-4.4%) and Auvergne-Rhône-Alpes (-4.1%), where the decline also occurred in Lyon. More than 9%. Loïc Cantin, president of the National Real Estate Federation (Fnaim), explains this by the high proportion of retirees, with more assets and less dependence on credit terms. Corinne Jolley, president of Particular to Particular, adds the quality-of-life dimension, which has become more important to buyers and is reflected in the vibrancy of coastal communities.

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Poor practices

Prices are falling due to historically low demand in light of difficulties in obtaining credit. Indeed, the number of transactions recorded in 2023 has also declined to 869,000 compared to 1.12 million a year earlier.

In Île-de-France, sales of older housing are expected to decline by 25% in 2023 compared to the previous year, with barely 140,000 sales. either “A historically low level of activity », points out the Notaries of Greater Paris.

Year 2023 “ Caught in a crisis which has been going on for two years and which is taking shape », warned Élodie Frémont, president of the Real Estate Statistics Commission of the Notaries of Greater Paris this Thursday. ” Its uniqueness is that it is fast, especially in terms of transaction volume

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Credit reduction

This decline in prices and transactions results from a decline in the real estate purchasing power of households. As a result of the restrictive monetary policy of the European Central Bank (ECB), 2023 was marked by rising lending rates. The ECB’s key rate hikes to curb inflation have been 10 in a row and currently stand at a record level of 4%.

All hopes now turn to a future cut in ECB key rates, which is increasingly being considered. Credit rates in France also started to decline slightly in December, according to the Credit Lodging Observatory/CSA, after two years of increases at the central banks’ heels. But not enough to declare victory too quickly. Because even though real estate prices have fallen, the price gap between sellers’ expectations and buyers’ borrowing capacity is still huge.

Households applying for loans are therefore forced to lower their expectations in terms of surface area or neighborhood, increase their contribution, or postpone their purchase project until better days. The production of new housing loans (excluding renegotiations) has also fallen below the 10 billion euro mark monthly since last summer, according to the Banque de France, for the first time since early 2016.

Buyers should understand that their borrowing capacity is now reduced », observes Elodie Frémont. ” They must understand that their contribution must be substantial, so family support or previous sales are often required. », he explains, reflects the increase in the average age of buyers and the overrepresentation of the wealthiest socio-professional categories.

And for 2024?

Property prices in existing properties should also continue to decline this year, according to the Notary of Greater Paris.

It’s the same story for Loïc Cantin, president of the National Real Estate Federation (Fnaim), who predicts a 6 to 8% drop in prices in 2024. We are actually at the beginning of a price readjustment in the market, which should continue “, he says. But there is no reason to be pessimistic.

Buyers, today, are regaining control of the market, revisiting, negotiating power again », he comments. ” The only way to recover their purchasing power is if prices continue to fall.

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For their part, notaries were pessimistic about the trends. Elodie Fremont sees ” The wait and see attitude is worrying », owners and buyers are waiting for more favorable market conditions, and to see legislative developments more clearly, especially on energy performance.

(with AFP)

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