QIf we look at the previous year, the figures related to the real estate market are improving. They clearly reflect the immense difficulties the field is going through, having gone from a period of long euphoria in two years, to what today is widely seen as a disconnect from reality, to a painful and violent return to Earth.
Over the past fifty years, sales numbers have experienced unprecedented historical declines
In 2023, therefore, 129.5 billion euros of new real estate loans were granted, the lowest level since 2015, according to the Banque de France. The number of sales fell from 1.13 million in 2022 to about 875,000 last year, a “historic decline of 22%, an unprecedented ©es in the last fifty years…
QIf we look at the previous year, the figures related to the real estate market are improving. They clearly reflect the immense difficulties the field is going through, having gone from a period of long euphoria in two years, to what today is widely seen as a disconnect from reality, to a painful and violent return to Earth.
Over the past fifty years, sales numbers have experienced unprecedented historical declines
In 2023, therefore, 129.5 billion euros of new real estate loans were granted, the lowest level since 2015, according to the Banque de France. The number of sales fell from 1.13 million in 2022 to about 875,000 last year, meaning “a historic decline of 22%, unprecedented ©es in the last fifty years,” the National Real Estate Federation (Fnaim) underlines. At the same time, the new housing construction market collapsed, “close to its historical lows of 1992-1993”, recalls the French Federation of Construction (FFB), meaning 287,100 construction starts (-22% in one year) and 373,100 buildings. Permit Authorization (-23.7%).
offer shock
How did we get here? The reasons are multiple, and the first of them is the explosion in interest rates on real estate loans from 2022. In particular, to curb the inflation caused by the war in Ukraine, the European Central Bank (ECB) has tightened and increased its monetary policy. its prime rates. According to credit observatory Housing-CSA, the increase passed by banks, whose twenty-year rates increased from 0.99% in December 2021 to 4.26% in December 2023. The slight decline seen in January 2024 (4%) does not change anything, as more modest declines are likely in the coming months: households’ real estate purchasing power has well and truly dissolved, often forcing them to abandon acquisition projects. , and captured the market.
The real estate purchasing power of households has actually melted away
For several months, professionals in the field have been sounding the alarm and, at the beginning of the year, the government is trying to control the fire. Reappointed after a long month of waiting, the new housing minister, Guillaume Kasbarian, promised a “shock of offers”. Gabriel Attal took action, asserting that he had “ordered an emergency” for housing in France: “We will find all possible housing with our teeth,” assured the prime minister, promising “tangible results in three years”.
Last week, the announcements developed: first the production, through the injection of “public money”, of “30,000 housing units” in “22 committed regions”. ©sÂ, including Bordeaux and Biarritz. Then, to speed up construction, facilitate “elevation, especially in the city”, simplifying procedures for building around individual houses, or even facilitating the transformation of offices into housing. An approach “which we can only welcome, but which does not meet the needs,” responded Loïc Cantin, president of Fnaim.
“Support” for higher prices.
At the financial level, in order to restore purchasing power to households, the Minister of Ecological Transition, Christophe Bechu, mentioned two instruments: final loans and mortgage credit. ©caire. With the first, “monthly payments are calculated, for example, at 80% of the loan amount,” explains Pierre Madec, an economist specializing in real estate at the French Observatory. The remaining 20% is paid at the end, usually “through the sale of the accommodation”. For another, real estate is mortgaged, which protects the bank in case of default by the borrower.
“This does not address the fundamental problem, which is the disconnect between household income, credit status and home prices.”
“This type of financial system makes households artificially solvent,” laments Pierre Madec. And it doesn’t solve the fundamental problem, which is the disconnect between household income, credit conditions and real estate prices. By allowing households to pay only 80% of their loans, we will allow them to make more expensive purchases. So we are going to support higher prices. It’s kind of a race to the front…
According to him, the real issue concerns these famous prices, which, despite a timid reduction last year, are still very high compared to the reality of the market: “In order to facilitate access to property for families, prices will have to decrease or their income will decrease. Increase But, for the moment, we have neither, he notes. We sometimes hear that 4% rates are not a problem because we experienced them so long ago. But then the prices were not the same! At times, We have to think of a way to reduce prices.” An ambition that will not be favored, according to the Economist, by easy access. Credit in penalty or mortgage.
“There will be a lack of housing”
Pierre Médec’s main concern is mainly related to the new housing construction market. “What is happening in New is very serious,” he worries. In twenty-five years, we have never seen such low numbers. Overall, we are in one of the most serious crises the region has ever seen.” Are recent government announcements going in the right direction? “Of course, reaffirming the need for housing construction is a good thing,” he replies. But these declarations do not address the issues. “
Not too optimistic, the economist admits that he does not see any improvement in the short term: “It is a first step, but the announcements of Gabriel et al suggest that” we still do not fully understand the crisis. Passing by, he says. We’ve lost about 150,000 housing units since the crisis in new production began, so the 30,000 housing units announced doesn’t seem like much. The problem is that the housing we cannot build today is the housing we will lose tomorrow. By not building today, we are increasing stress on future real estate markets. So the crisis, in reality, may still be ahead of us…
