2023-04-22 21:29:08
After months between a slowdown in the rise and stagnation, the fall in real estate prices is becoming a reality. In the first quarter, property values fell by 0.5% in France, to 3,199 euros per square meter on average. If this fall remains moderate, France is the only European country – out of the seven studied by Aviv Group, which brings together the SeLoger and Meilleurs Agents brands in France – where it materializes, in a study revealed by the JDD. Portugal, Italy, Spain or Belgium continue to see prices rise. Germany, which experienced a decline in 2022, is recovering (+0.4%).
Evolution of prices in Europe during the first quarter of 2023.
© The JDD / Aviv Group
Metropolises, medium-sized towns, rural areas, except for a few pockets of resistance – including Nice, where the square meter has increased by 2.1% in three months – the whole of France is turning red. “Even the Parisian market has fallen by 4% in one year”, underlines Thomas Lefebvre, scientific director of Aviv Group. According to a survey by the Fnaim (National Federation of Real Estate), Paris is one of the three European capitals in decline (along with Helsinki and Copenhagen) in the 16 countries analyzed. “The cities where the declines are the most significant are those whose real estate market has increased the most strongly in recent years”nuance Loïc Cantin, president of the Fnaim.
Rising interest rates
Who is responsible for this plunge? Undoubtedly, interest rates on home loans, which have increased from less than 1% to 3% in just under a year. “This increase results in a loss of purchasing power of 10 to 15% for buyers”, explains Henry Buzy-Cazaux, president of the Institute for the management of real estate services. Because prices are falling, but not yet enough to compensate for the weakening of household borrowing capacity. “We will have to expect prices to fall another 7 or 10% over the year.announces this specialist. The term crisis is not an exaggeration. » Owners who have bought at a high price in recent years refuse to suffer the effects of the decline. And prefer to temporize. Hence the lengthy negotiations: in one year, sales times have gone from sixty-one to sixty-seven days, according to Meilleurs Agents.
An improvement seems unlikely. Especially since the European Central Bank (ECB), which has raised its key rates every quarter since July 27, 2022, has a direct influence on the rates charged by commercial banks. “The ECB will continue on this path, as inflation remains high”assumes Thomas Lefebvre, who estimates that banks will no longer lend below 4% by this summer.
Big drop in new home sales in 2022
If the old market is affected, the new suffers even more. The Federation of Real Estate Developers (FPI) figures the drop in the number of sales of new homes to individuals and investors at more than 24% in 2022. This is a level lower than that reached in 2020, in the midst of a pandemic. “Institutional investors do not proclaim it loud and clear but, in reality, they are selling housing in blocks at prices 20% lower than those practiced before”reveals Henry Buzy-Cazaux. “In 2008, during the financial crisis, the construction sector had already experienced a comparable decline, but benefiting from a public support system, such as Pinel for rental investment. This is not the case today “warns Pierre Madec, economist at the OFCE.
In 2008, during the financial crisis, the construction sector had already experienced a similar downturn
Pierre Madec, economist at the OFCE
For this specialist in the sector, the downturn in the real estate market will have repercussions far beyond deflation. “For those who bought a few years ago at very high prices, whose property represents the only heritage, the fall in prices will lead to a loss of capital”warns the economist. “A feeling of general impoverishment is likely to spread, with direct consequences on household consumption”, worries Henry Buzy-Cazaux. Not to mention the loss of earnings for local authorities, whose tax revenue from real estate transactions (transfer duties) and taxes calculated on the value of property constitute a significant part of their income.
“Everything can collapse quickly. If the French fail to satisfy their need for housing, this can result in very strong social resentment”, continues Pierre Madec. The government, for the moment silent on the evolution of the market, seems to be betting on a simple transition period, intended to stabilize itself. The National Council for Refoundation (CNR), dedicated to housing, must present its proposals on May 9. But many players in the real estate market already fear that no concrete decision will result.
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