How is the purchasing power of the French in new real estate evolving in this second half of 2023?

Consult all the infographics from the Empruntis new barometer here.

With its partner, Empruntis offers an analysis of the evolution of real estate loan rates and prices for new properties, with the aim of assessing the purchasing power of the French in this market.

• In a few months, in the 10 large cities studied, rates continued to rise.
• On the other hand, several large cities, such as Nice, show falling sale prices.

New property prices: downward corrections in half of major French cities

The trend is downward in several large cities on the average price of a new three-room apartment: Lille is falling slightly and becomes the most affordable city in this top 10. Toulouse, which is seeing its prices continue to increase: + 4% and therefore loses its status as the cheapest major metropolis in France. With - 3% and - 8% respectively: new property prices in Lyon and Nice fall back below the €400.000 mark for T3. While prices in Nantes have fallen by almost 6% since February, those in Bordeaux are still increasing: + 2%, the gap is widening between the two large western metropolises. Note that Montpellier, which pursues a policy of shock supply and production of affordable housing, displays marketing prices down by almost 2%, now ranking 7th in the ranking. A downward dynamic which extends to the entire territory, according to the latest figures from Find-un-logement-neuf.com which recorded declines in 3 out of 5 cities in the most active localities in terms of real estate development.

For Céline Coletto, spokesperson for Find-un-logement-neuf.com: “The lull that was evident during the previous barometer at the start of the year is confirmed in the fall of 2023. 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. »

Real estate loan rates, strong pressure on purchasing power

Still on the rise, mortgage rates continue to increase from 125 basis points (in Paris) to 155 basis points (in Lille). In November, over 20 years, the average rate (excluding negotiations) varies depending on the cities studied between 4.3% and 4.6%.

For Cécile Roquelaure, director of studies at Empruntis: “The ECB's successive rate increases and the strong rise in the 10-year OAT (equivalent treasury bond) have weighed heavily on the banks' financial strategies. Especially since the usury rate, as since April 2022, prevented banks from proportionally increasing the price of credit. The modification of the updating of the wear rate, initiated at the beginning of 2023, normalized the situation but it took more than 6 months to achieve this. Since September we have therefore seen an increase in the number of financing solutions and this is good news. However, the impact on household budgets is once again major. Between February and today, households have lost between 10 and 13% of borrowing capacity.”

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

Throughout France, the purchasing power of new real estate is declining

Prices are falling in 5 out of 10 large cities, however this is not enough to offset the rise in rates. So despite price drops in Lyon, Lille, Nice, Montpellier, Nantes, the monthly payment for the purchase of a new three-room apartment is increasing.

In detail, the monthly mortgage payments (excluding insurance) over 20 years are between €1.948 in Lille and €5.038 in Paris.

It is in Marseille that we note the strongest increase in the monthly budget dedicated to property purchases: +23%. This translates into a monthly payment of €2.089 compared to €1.699 last February, or €300 more.

Next, come in order:

• Toulouse +20%, i.e. a monthly payment of €1.956
• Strasbourg +19%, i.e. a monthly payment of €2.081
• Bordeaux +17% or a monthly payment of €2.224
• Lille +14% or a monthly payment of €1.948
• Paris +13% or a monthly payment of €5.039
• Montpellier +11% or a monthly payment of €1.969
• Lyon +11%, i.e. a monthly payment of €2.479
• Nantes +8% or a monthly payment of €2.131
• Nice +5% or a monthly payment of €2.441

What are the short-term prospects?

For Cécile Roquelaure, director of studies at Empruntis: “The rise in rates has slowed significantly since September. The ECB's rate stability and the maintenance of the 10-year OAT between 3 and 3.5% should allow us to reach a level where the average rate will stabilize below 5%. This is good news for borrowers, especially since banks are more proactive, the context being less financially unfavorable for them. However, there remain many elements that could constrain future buyers. The modification of the conditions of access to the PTZ, even if the refocusing has been adjusted, constitutes an additional handicap for households. The removal in relaxed areas, if confirmed, forces households to move towards old buildings with energy renovation challenges which are often beyond their financial means. »

For Céline Coletto for Find-un-logement-neuf.com: “Despite the current context and the difficulties in accessing credit, households still have every interest in favoring new real estate both for living and for investing. Indeed, faced with the imperatives of rebuilding the city on the city and the ZAN, while respecting increasingly high construction standards, RE 2025, RE 2028, RE 2031, we must, in our opinion, take advantage of this break on the sale prices and the discounts and other commercial discounts currently granted by developers on their hard stock. With reduced notary fees, the even refocused PTZ, the last months of Pinel to reduce taxes and above all the green value of opting for environmentally-advanced housing, new construction retains its comparative advantage. »

Methodology

Simulations carried out on the basis of average rates (excluding insurance) recorded on November 6, 2023 and the price of a three-room apartment recorded in November 2023 on the site Find-un-logement-neuf.com. The PTZ simulation was carried out on the basis of a 25-year rate of 4.4% excluding insurance, monthly payment and cost of credit excluding insurance, simulation with contribution of costs and RFR of €60.000. Rates vary depending on the borrower's profile and project.

Please note: the new barometer was carried out until its February 2023 edition on the lowest rates on the scale of at least one bank. Due to the criteria applied by the banks, it was chosen, for a more transparent approach, to carry out the simulations using average rates. The calculations have been updated with these rates for the month of February to allow a comparison on a consistent basis.

Consult all the infographics from the Empruntis new barometer here.

Illustrative image of the article via Depositphotos.com.