CREDIXIA has calculated the evolution of borrowing capacity over the past 20 years. And, thanks to the drop in rates, it has increased by 68% in 20 years. On the other hand, in some towns in Ile-de-France, real estate prices have soared. In 20 years, have we gained real estate purchasing power?
2001, start of a new millennium
If the euphoria of the 2000s and the arrival of the euro led to an increase in purchasing power in 2001 (+ 1,6% purchasing power / year from 2000 to 2008), the loan did not is not favored at this time. Indeed, the rates are very high (7% for a loan over 20 years) and France is experiencing real estate price inflation. In 2001, the banks granted only 66.182 million Euros in loans to individuals.
2011, end of the crisis
The 2008 financial crisis marked a sudden halt in the economy and had a heavy impact on the real estate sector. We are witnessing a "market reversal", rates and prices plummet. If the situation stabilized around 2011, the fall in rates remained constant and lasted in particular until 2014. In 2011, rates stood at around 4,20% on average over 20 years, and in March 2011 they reached a record rate of 3,60% (according to the Housing Credit Observatory). Despite the fall in rates, 2011 recorded a 6,1% drop in real estate sales compared to 2010.
2021, the aftermath of COVID 19
Since 2014, the real estate market has known good years, we note in particular the milestone of one million real estate transactions exceeded in 2019 which testifies to its favorable state. However, the health crisis experienced in 2020 lowered purchasing power (-0,5%) and led to a slight increase in interest rates over a short period (February to May 2020).
The number of real estate transactions canceled due to COVID19 stands at 250.000. Fortunately, 2021 has seen an increase of + 10% in loan applications compared to 2020, this increase is partly justified by exceptionally low rates: the average rate noted in February 2021 is 1,03% for a loan over 20 years. , CREDIXIA even announces a record rate of 0,70% over the same period.
Evolution of mortgage rates from 2001 to 2021
It is clear that for 20 years, mortgage rates have been falling with a tumble since 2015 as shown in the attached graph.
In 20 years, borrowing capacity has increased by more than 68%
Take the example of a couple who want to buy an old apartment in Ile-de-France. They earn € 60.000 net per year and hold 10% of the contribution. In order to comply with the standards of the HCSF (Haut Conseil de Stabilité Financière), their monthly payment amounts to € 1713 (33% debt excluding insurance).
The observation is clear, in 20 years, the borrowing capacity of this household has increased by + 68%. Between 2001 and 2021, interest rates fell dramatically, from an average of 7% to 1,03% over 20 years. However, over this same period, real estate prices soared in Ile-de-France. In order to calculate the real evolution of purchasing power, CREDIXIA compared the purchasable surface area of this couple per decade.
In 20 years, a Parisian has lost 50% of his living space during a real estate purchase
CREDIXIA has chosen 3 cities where its agencies are located to calculate the evolution of prices per m².
In Paris and Versailles, if the borrowing capacity has increased thanks to the fall in rates, the price per m² has been so inflated that the purchasable area has considerably reduced in 2021 compared to 2001.
- In Versailles, the couple lost 94,78 m² of living space, and in Paris, they lost 37,77 m², ie a loss of around 67% and 51% of the living area, respectively.
- The same goes for the town of Chelles, despite a borrowing capacity that has doubled and a smaller increase in the price per m², the couple lost 77,87 m², ie a loss of around 41% of the living area.