How is the purchasing power of the French in new real estate evolving? The broker Empruntis provides some answers to this question in its latest half-yearly barometer of the real estate market, published this Tuesday, November 14. With the specialized site Find-un-logement-neuf.com, he has calculated the monthly credit payments necessary to acquire a new three-room home in the 10 largest cities in the country. And unsurprisingly, the real estate purchasing power of the French is still declining in large cities.
However, new property prices have tended to fall in several large French cities in recent months. In Lyon and Nice, the average prices for a T3 have fallen by 3% and 8% respectively compared to February, to fall below the 400,000 euros mark. In Nantes, prices even fell by 8% on average, the largest decline over the last six months among the 10 largest cities in the country. And this downward dynamic extends to the entire territory. “While sales of new homes are at a historically low level, developers are doing everything to reduce their sales price. This is reflected in these price reductions in more and more cities to try to restore the borrowing capacity of households.underlines Céline Coletto, spokesperson for Find-un-logement-neuf.com.
Soaring rates falling prices
But this slight decline in new home prices is not enough to offset the rise in credit rates, which has penalized buyers in recent months. Since February, rates have in fact jumped on average by around 1.5 points nationally. An increase which is mainly explained by the decision of the European Central Bank (ECB) to regularly increase its key rates since the start of 2022 in order to stem inflation. “The impact of these successive rate increases on household budgets is major. Between February and today, households have lost between 10 and 13% of their borrowing capacity.indicates Cécile Roquelaure, director of studies at Empruntis.
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Consequently, the monthly loan payments necessary to acquire a new property have logically skyrocketed in metropolises. In Marseille, a household wishing to buy a new three-room home with a 25-year loan saw its monthly payments increase by 23% in November compared to February, reaching 2,089 euros. This is the largest increase among the country’s 10 major cities. The monthly payments required to buy a property have also soared over the last six months in Toulouse (+20%), Strasbourg (+19%) and Bordeaux (+17%).
Fortunately for future buyers, the increase in credit rates has slowed significantly since September. “The stability of the ECB’s rates and the maintenance of the 10-year OAT (Assimilable Treasury Bond, the French state loan) between 3 and 3.5% should allow us to reach a level where the average rate will stabilize below 5%, adds Cécile Roquelaure. It’s a
good news for borrowers, especially since banks are more proactive, the context being less financially unfavorable for them.”
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