Old real estate prices go into the red

Compared to the fourth quarter of 2022, prices fell by 0,2%, according to the Notaires-Insee index, which refers, published on Tuesday.

Over one year, prices increased by 2,7%, a very marked deceleration compared to the end of 2022 (4,6%).

"The real estate market seems to have entered a new era, with increasingly high interest rates", noted at a press conference the president of the statistical commission of Notaries of Greater Paris, Elodie Frémont.

“It is therefore a real shock that is suffered in this quarter”, underlines Me Frémont, noting a fall in transactions over 12 months, which fell from 1,12 million at the end of 2022 to 1,07 million in the first quarter of 2023. A figure which nevertheless remains higher than the historical average.

The notaries' index, based on definitively concluded sales, reflects market trends with a few weeks' delay, but it is the most exhaustive indicator.

"This is the first trend reversal, which is a strong marker of the impact of the reduction in the borrowing capacity of all French households when faced with the acquisition of real estate", reacted for AFP Loïc Cantin, president of the National Federation of Real Estate (Fnaim).

In a context of inflation, real estate suffers from the rapid rise in interest rates, which heavily penalizes households having to borrow to acquire a property.

"The first-time buyer, he is there, there is a need for housing, but he still has to make a choice now: pay more or make sacrifices on the surface, detailed Me Frémont.

Not to mention those who are refused a loan, always numerous according to notaries.

"The structural lack of housing, and low credit rates, is what has caused prices to have multiplied by 2,5 in 20 years, and there, we feel that this phase is over", commented Corinne Jolly, president of Particulier à Particulier.

A lack that is not likely to be reduced, new construction being down, with a fall in the first quarter of reservations with developers (-41% over one year) and building permits (-11,5%).

Setback of houses

In the Paris region, prices are now in the red over one year (-0,6%). The decline in Paris is accentuated (-2%), except in the most expensive districts (Paris Center, VIth, VIIth), where real estate continues to climb, undoubtedly driven by luxury goods and foreign buyers.

The Notaries of Greater Paris predict that the annual fall in prices should increase in the second quarter, approaching, for Ile-de-France, 5% for apartments and 3% for houses.

Across France, houses continue to grow faster than apartments (+3,1% against +2,2%), as has been the case since 2020, but the gap is closing rapidly compared to previous quarters .

Moreover, in the first quarter of 2023 alone, the trend was reversed: the price of houses fell more than that of apartments (-0,3% against -0,1%).

"People realize that the house was not made for them", comments Corinne Jolly. "They are moving away a little from the postcard image that there was at the end of confinement."

Environmental regulations which will gradually prohibit the rental of thermal colanders are beginning to have an impact on sales, note the notaries.

In Ile-de-France, the share of housing classified G (the worst label) in transactions tripled between 2021 and 2022 for apartments (2,7 to 7,9%) and doubled for houses (3,6 at 8,5%), according to data from notaries.

In the coming months, "there could be a two-speed market", imagines Corinne Jolly, "with an influx of offers for thermal colanders because of sellers who do not know what to do with them".