How is the purchasing power of the French in new real estate evolving?

With its partner Trouver-un-logement-neuf.com, Empruntis offers an analysis of the evolution of mortgage rates and prices for new builds, with the aim of assessing the purchasing power of the French in this market.

• Rates have fallen sharply, restoring purchasing power to households.
• At the same time, most cities have been showing falling listing prices since the beginning of the year.

Buyers hold all the cards!

From what monthly payment can you become the owner of a new 3-room apartment?

New real estate: a general drop in prices, but exceptions persist

The new real estate market in France is currently undergoing a significant transformation, marked by a general downward trend in prices in several major cities. However, a few major cities are resisting this trend, offering a contrasting landscape to investors and potential buyers.

This drop in prices can be explained both by the natural adaptation of the new and old real estate market and by the need for developers to find buyers in their destocking phase.

A symbol of this current correction, Bordeaux stands out with a significant drop in prices.

This rapid and significant decrease reflects a major adjustment in the new-build market in the Gironde capital. It is a return to price levels more in line with economic reality and the solvency capacity of households.

A trend that is becoming more widespread

Other major cities are following suit: Nantes, Marseille, Strasbourg, Montpellier and Lille are also recording drops of between 3.6% and 14.6%.

In Paris, a niche market, the drop is even more significant but must be very nuanced by the low number of new properties available for sale, which are concentrated in peripheral districts and at the end of programs.

Despite this general trend, some metropolises are showing resistance. In Toulouse, the average price of a three-room apartment has increased by 2,5%, while Lyon has seen a slight increase of 1%. These increases, although modest, contrast with the national trend.

Nice, the exception that proves the rule: the Mediterranean city stands out with a significant price increase of 7,6% for a three-room apartment, the reference surface area in this barometer. This increase is explained by a very reduced supply and the impact of certain high-end operations on the average price. The Côte d'Azur being more of a second home market, buyers were also less affected by the increase in rates.

For Céline Coletto, spokesperson for Find-un-logement-neuf.com: "The price correction that has been taking place for almost a year now in real estate development can even be seen in most of the 10 largest cities in France. Faced with an increasingly reduced number of Pinel investors and, as a result, a market that is naturally turning more towards first-time buyers, developers are in the process of putting together an offer that is more in line with the new borrowing capacity of households and is therefore more affordable."

According to the latest data from Trouver-un-logement-neuf.com, 7 out of 10 large cities, among the most active localities in terms of real estate development, have therefore recorded a drop in prices since the March 2024 barometer.

At the same time, interest rates are also continuing to fall, reinforcing the market's attractiveness. The drop in rates in different cities has averaged 45 basis points since March 2024. This drop is becoming more pronounced for new properties thanks to a more accommodating policy from many banks towards energy-efficient properties.

In October 2024, the average rate over 20 years (excluding insurance) fluctuates between 3,45% and 3,55% depending on the cities studied.

For Nassima KHIARI, head of banking relations at Groupe Empruntis: "The recent decision by the European Central Bank to lower its key rates once again opens up encouraging prospects for the real estate market. This second consecutive drop, after that of September, suggests a continued decrease in interest rates, creating a particularly favorable context for potential buyers but also for developers, allowing them to slow down the decline in their prices. Banks, keen to achieve their production targets for 2025, are implementing strategies to stimulate the granting of real estate loans, particularly for first-time buyers. Among the levers activated for this clientele, we note the possibility of significant discounts (up to 60 basis points compared to the rate scales displayed) and the extension of the loan duration. Some partners also offer a zero-rate envelope for first-time buyers and others specific discounts linked to the energy performance of the housing."

For example, for €1.000 of monthly credit payments excluding insurance:

French real estate purchasing power significantly improving

Of the ten largest cities in France, nine cities recorded a drop in the monthly budget dedicated to the purchase of a new three-room apartment: Bordeaux, Lille, Strasbourg, Marseille, Nantes, Montpellier, Toulouse, Lyon and Paris.

In detail, the monthly payments (excluding insurance) over 20 years are between €1.714 in Strasbourg and €3.746 in Paris.

Come in order:

• Paris: -26%, i.e. a monthly payment of €3.746. This drop should be interpreted with caution given the low availability of new properties on the Parisian market.
• Bordeaux: -19% or a monthly payment of €1.741.
• Lille: -16,1% or a monthly payment of €1.742
• Strasbourg: -11.4% or a monthly payment of €1.714
• Marseille: -9.3% or a monthly payment of €1.817
• Nantes: -7.3% or a monthly payment of €1.836
• Montpellier: -7.3% or a monthly payment of €1.776
• Lyon: -2.7% or a monthly payment of €2.341
• Toulouse: -1% or a monthly payment of €1.746
• Nice: +3.7% or a monthly payment of €2.525

What are the short-term prospects?

For Nassima KHIARI, head of banking relations at Groupe Empruntis: "While the new property market is experiencing very favorable developments, buyers hold all the cards. Between falling prices in the majority of large cities and attractive interest rates that continue to move, the conditions are favorable for home ownership. In addition, the government is expected to announce new measures to support the new property sector. Among the expected measures, the expansion of the Zero Interest Rate Loan to the entire territory and its extension to individual houses. Finally, several French cities (for example Bordeaux) present situations where buying new property can prove less expensive than buying old property, once all the associated costs are taken into account. This situation can be explained in particular by the fall in prices of unsold properties but also by the new energy standards and the obligations linked to the DPE which make certain old housing more expensive given the renovation work."

For Céline Coletto for Find-un-logement-neuf.com: "There is, in our opinion, a window of opportunity that should not be missed. With the disappearance of Pinel on December 31, developers continue to free themselves from their stock by multiplying commercial offers and discounts. While at the same time, a new threshold is looming to be reached from 2025 in the Environmental Regulation, RE2020, we can imagine that once this stock has been purged, commercial operations will end and prices will start to rise again in a forced manner in order to absorb this imposed technological leap."

The message is clear: "now more than ever is the time to buy new!" conclude the two experts.

Illustrative image of the article via Depositphotos.com.