While the rise in the prices of existing homes hardly faltered, even strengthening in a large number of territories, activity rebounded in October as is usual before the drop in the winter months. But this rebound remains contained: the number of compromises signed was 14.2% lower than in October 2021.
Rebound in the rise in the price of the old in October
As is common at the start of autumn, the rate of increase in the prices of existing homes is slowing down, following the summer months during which the rise was particularly strong. In a market marked by the weakening of activity, in the face of demand penalized by the tightening of the banking offer and the increase in the cost of credit, this recent trend in prices might be associated with a turnaround in the economy, if it was in fact only a seasonal inflection.
Also in October, prices for apartments and houses rose slightly once more over the past 3 months. And on the market as a whole, the pace of the increase measured in rolling annual level is accelerating further, to stand at 4.6%: the level of signed prices is therefore now 6.4% more than in October 2021: 8.5% more for houses and 4.9% more for apartments. Because the transformation of the market continues: part of the demand penalized by the requirements of a higher personal contribution moves towards the zones where the prices are more accessible, reinforcing the preexisting upward tendencies there; while the competition between the buyers with the best personal contribution is accentuated in the most coveted areas, in the context of a scarcity of supply.
Sustained increase in new home prices
For more than a year, activity in the property development and single-family home markets has been deteriorating. However, the rise in new housing prices is not abating. True, as is often the case at the end of summer, the rate of increase in apartment prices is slowing down. But the pressures on prices are numerous and persistent: they are fueled by the increase in the prices of building materials, the strengthening of wage pressures and the new requirements of the RE2020; while the price of building land is rising rapidly, in a context of shortage reinforced by public decisions (revision of the SCoT, constraint of the ZAN, etc.).
Thus, the rise in the prices of new housing is continuing at a sustained pace, following having strengthened at the end of spring. It remains rapid on the apartment market, with a 5.1% year-on-year increase in the rolling annual level: prices are then displayed at 5.9% above their level of October 2021. And it is strengthening on the market homes, with prices up 2.7% year-on-year now standing 13.4% above their October 2021 level.
Sustained rise in prices in most cities
The weakening of the rise in the price of old apartments observed in a few large cities very often seems to be the prelude to a saving decline in a depressed market. However, if we limit ourselves to large cities with more than 150,000 inhabitants, such a weakening is only observed in 6 of them: Bordeaux, Grenoble, Montpellier, Nantes, Paris and Reims. In these towns, where the increase over one year is no more than 1 to 2%, demand faced with high price levels no longer succeeds in mobilizing the personal contributions required to access credit. And very often, it also turns away from markets that have lost a large part of their past attractiveness.
However, in other large cities, the rise in prices is still accelerating, beyond 10% over one year, such as in Clermont-Ferrand, Le Havre or Marseille, with price levels not hampering the completion of projects. While the increase in prices remains sustained (between 6 and 8%) and without weakening in Angers, Dijon, Lille, Nice, Nîmes, Rennes and Saint-Etienne: as much because of the attractiveness of these markets, as in response to the pressure of demand in areas where supply remains very insufficient.
And overall, the rise in prices is 10% or more over one year in 19.4% of cities with more than 50,000 inhabitants: in ¾ of cases, these are medium-sized cities or at 2,500 €/m² at most. And the increase remains at least equal to inflation in 50.0% of large or medium-sized cities. While the fall in prices is only observed in 4.3% of cities: either due to particularly high prices (Levallois-Perret) or on the contrary very low prices (Calais or Tourcoing), on (very) depressed local markets.
A half-hearted month of October
The market environment for old properties has deteriorated further since the end of the summer. Credit conditions are still deteriorating a little more: interest rates rebounded in October following the revision of the usury rate and the banking supply is being hurt by the rise in intervention rates from the ECB which affects the margins of distributing establishments. In addition, the strengthening of inflation affects households’ real estate purchasing power a little more. While the rise in the price of existing homes has barely faltered, even strengthening in many areas.
Nevertheless, following an exceptional fall in purchases of existing homes during the months of August and September (-19.4% year-on-year), activity rebounded in October as is usual before the drop in the winter months. But this rebound remains contained: the number of compromises signed was 14.2% lower than in October 2021. After a very bad summer, the decline in activity measured over the first 10 months of the year is thus 11.8% year-on-year. And as the probability of a rapid recovery in demand by December is particularly low, the rate of change in sales measured in rolling annual levels at the end of October (-10.5% year-on-year) foreshadows what the balance sheet of the year 2022.
Rapid increase in margins in October
On an old market whose activity is still deteriorating, the increase in trading margins continues. In October, they stood at 6.1% for the market as a whole, up 46% over one year, on both the house market and the apartment market. And we have to go back to the beginning of 2010 to find such a deteriorated situation, especially since this change in margins is general and concerns all regions.
But these developments hardly benefit buyers, by strengthening their negotiating capacities. Because the market for old properties is largely fueled by the resale of goods by households seeking to buy another home: if the real estate projects of households are thwarted (difficulties in accessing credit, deterioration in purchasing power), resale flows are easing and market activity is contracting.
Demand is thus doubly penalized. And candidates for a purchase must negotiate more than in the past to complete a financing plan acceptable to the bank, while sellers (more often forced to resort to a bridging loan, faced with the lengthening of the deadlines for making sales ) must agree to reduce the asking prices to finalize the transactions.
However, price revisions are not synonymous with a drop in the price of the old: the ambitions of new sellers take into account the situation of shortage which characterizes the market and the prices displayed always increase rapidly.
Fall in sales in all regions
In France as a whole, purchases of old homes by individuals fell by 11.8% over the first 10 months of the year, year-on-year. And no region is more spared by this fall in sales, even if in some the activity still resists a little better to the downward wave. Because if everywhere the shock which disturbs the request is multifactorial, the only common denominator remains the sinking in a crisis ready to last.
In the two regions which until last September still benefited from a slow expansion of activity (Ile de France and Midi-Pyrénées), the fall in sales is moderate, by only a few percent. On the other hand, sales fell by around 10% in very different regions both in terms of the size of the markets and the levels of prices practiced or the income of buyers (Alsace, Auvergne, Languedoc-Roussillon, Limousin, Lorraine, Nord- Pas de Calais, PACA, Picardy and Rhône-Alpes). In PACA and Rhône-Alpes, the decline in sales is still moderate compared to other major regions. Whereas in the other regions, demand has been falling at the same pace as the market since the start of the year.
On the other hand, purchases fell by more than 20% over one year in the other regions: when the difficulties in mobilizing personal contributions were more pronounced than elsewhere, when the banking offer came up once morest a particularly low profitability of new loans or when the second home market is particularly tight.
Reinforcement of price increases in metropolitan areas
After slowing down until the end of the summer, the increase in apartment prices is gaining momentum in all major cities. The rise is still the fastest in the metropolitan areas of Aix-Marseille, Brest and Lille (at least +7.5% over one year): the already long-standing misalignment between supply and demand has been reinforced with the arrival of new clienteles (investors, mobility and professional changes, etc.) looking for opportunities. Although less rapid, the increase is sustained (from 5 to 7%) in the metropolitan areas of Nancy, Paris or Rennes: in the metropolitan areas of Nancy and Rennes, the increases are fastest in the central cities, the displacement of the demand towards the peripheral communes being slowed down by the levels of prices practiced. In addition, the scarcity of goods available in the center of metropolitan areas is reinforced by the development of a supply of public services which increases their attractiveness. On the other hand, the increase in prices remains the slowest (less than 2%) in the metropolitan areas of Bordeaux, Nantes, Strasbourg and Toulouse where, despite the situation of shortage resulting from insufficient supply, price levels have discarded candidates for purchase already largely penalized by the tightening of access to credit.
On the housing market, where price increases had remained contained in most cities until the end of last spring, prices are recovering. The rise in prices is fastest in the metropolitan areas of Nancy and Strasbourg (more than 7.5% over one year): in a relatively narrow market, it is the result of a rapid increase in prices in the city center, the shift of demand towards the periphery being made more difficult by the price levels practiced in a context of tighter access to credit. And the increase in prices is now rapid (around 5% over one year) in the metropolises of Lille and Nice: the increase is explained by the trend observed in the outskirts, while prices are still falling slowly. in the city center.
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