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While prices have fallen by 2% overall in Paris over the past year according to data from MeilleursAgents, credit conditions are tightening and weighing on the ability of households to borrow to carry out their real estate projects. Let’s discover the evolution of the real estate landscape of the Paris region since the beginning of the year and what the second half of 2022 has in store for us before focusing on some advice if you wish to acquire a property in Paris or in the Paris region.
Real estate in Paris and Île-de-France: results for the first half of 2022
For nearly a year, real estate prices in the French capital have moved away from those of other major cities in France. While they increased by more than 6% in Marseille, for example, prices fell by 2% in Paris over the same period. The average price per square meter in Paris even approached the symbolic bar of €10,000 in May 2022.
With the exception of Hauts-de-Seine (92), where the development of the real estate market has seen a drop of 1.4% over one year, the other regions of Île-de-France are experiencing a certain dynamism. Val-d’Oise (95) recorded the highest price increase with an increase of 6.3%, followed by Seine-et-Marne (77) +4.9%, Essonne (91) + 3.8% and Seine-Saint-Denis (93) +2.7%.
Despite demand generally outstripping supply and prices falling in some popular cities, credit activity has slowed since the start of 2022.
The conflict in Ukraine has led to many uncertainties in the economy and has had a strong impact on the price of energy and agricultural raw materials, pushing inflation to new records. The tensions on the bond market and the prospect of a rise in key rates by central banks also supported the rise in borrowing rates, thus slowing down some households in carrying out their real estate purchases.
According to L’Observatoire Crédit Logement / CSA, loan production fell by 5.6% in France in the first half of 2022 year-on-year, as did the number of loans granted, which fell by 7.3% over the same period. period.
Read also: Becoming the owner of your property: what it really costs you
Outlook for the real estate sector in the Paris region for the second half of 2022
Prices should continue to rise in Île-de-France, in particular thanks to the Grand Paris Express project, which should transform the dynamism of Île-de-France by connecting the region to Paris. On the other hand, the opposite situation should be observed in Paris while part of the population tries to move away from the capital to obtain larger surfaces and/or a garden.
The change in rhetoric from the European Central Bank (ECB) on raising interest rates to combat galloping inflation should also support a rise in borrowing rates.
The uncertainty of the economic context in France, but also internationally, as well as the loss of purchasing power of French households, should also push up rates in this second part of 2022, which should continue to slow the pace purchase of households that need to borrow to buy.
For François Villeroy de Galhau, Governor of the Banque de France, rates might reach 3% by the end of the year.
Tips for a possible purchase in Paris or Île-de-France
The drop in prices in Paris might prompt some buyers to take advantage now, while others might want to wait until the drop is even bigger. It is also possible that some want to buy today in Île-de-France before prices rise too high to avoid buying at the high, while others might want to wait for prices to fall once more before get started…
Remember, however, that property prices take time to adjust downwards. Although there are many uncertainties regarding the economic context, you should also know that buying real estate now if you have a concrete project might allow you to secure a greater borrowing capacity than in the future because of the rise rate taking place and the tightening of lending conditions.
To save time and take advantage of the best loan conditions for your project, do not hesitate to use the services of a real estate broker.
If you want to apply for a loan yourself, it is important to do so in at least three different banking establishments to be able to compare the offers on the market. Also always remember to play the competition!
