So far, so good. This is the observation of observers of the French real estate market, at a time when many other sectors such as industry cannot say the same. The sales figures in the former published yesterday Tuesday seem to confirm this trend.
In the second quarter, the prices of old goods decelerated slightly, increasing by 6.8% over one year, or -0.5 points compared to the growth of the first quarter. Likewise, the volume of sales has weakened a little. ” This quarter remains a very good vintage, particularly in terms of price level »says about the national market Thierry Delesalle, president of the statistical commission of the Notaries of Greater Paris.
The national market reaches a plateau
If we take a look at the real estate landscape, France has displayed exceptional vigor in recent years. The number of sales jumped from 876,000 at the start of 2017 to 1,157,000 in the summer of 2022. A rare dynamism, probably not sustainable. ” Over the last twelve months, we have logically reached a plateau. It is true that the market is calming in the provinces with a slight slowdown of 3% in transactions. But be careful, the preliminary contracts do not collapse, especially in Paris and in the inner suburbs »reports Thierry Delesalle of Notaries of Greater Paris.
At the forefront of transactions, the Parisian notary testifies to a fallout from the rush to the provinces and the houses following the confinements. He notes a ” inversion ». ” During the pandemic, the market was wiser in Paris than in the provinces. For a year, the inner suburbs and Paris have been working better », he points. But according to him, all the French people who wanted to move have not done so yet. This explains his optimism about demand.
Recession: cold snap on stone?
However, these good statistics do not bode well for the future. Clouds are gathering over the real estate market, the same clouds hanging over the French and European economy. Starting with a general economic slowdown in the least bad scenario. Or a recession at worst. What to throw a chill on the stone?
” There will surely be a phase of slight decline in the event of economic stagnation. In this kind of period, prices historically tend to settle more than volumes. Prices should fall more in large cities, where they had increased the most, than in the provinces and on the coasts »anticipates Alain Trannoy, professor of economics at the University of Aix-Marseille.
Author of the book ” The great return of the earth in heritage with Etienne Wasmer, the latter tempers the risk of a collapse in the real estate sector. Even in the event of a recession. ” The French market is resilient, at least more than in the United States or the United Kingdom. The French have more savings with a household savings rate of 17% »he recalls.
“Very acceptable” rates at 2%
The pandemic and fears around the macroeconomic situation have filled the woolen stocking of the French. The use that will be made of these savings, for example as a contribution when buying an apartment or a house, represents one of the keys to the market among other uncertainties. Potential buyers decide according to the mortgage rate offered to them. The average 20-year benchmark rate is close to 2%.
” The rates are still very acceptable. At 2%, customers still go there. It is not the rate that slows down purchases but the files that are rejected by the banks. Because of the evolution of the usury rate (note: maximum legal interest rate that banks are authorized to practice during a loan), they are afraid that the loan conditions they offer exceed the rate of wear. They are waiting for the Banque de France to modify the usury rate. Meanwhile, borrowing files and purchase plans are put on hold », explains Thierry Delesalle, notary of Greater Paris, who calls for the wear rate to be updated every month and not every quarter.
Paris, safe haven
Faced with soaring prices, it remains to be seen how much the cost of money will jump, determining the final decision of buyers. A credit restriction as in 2008 would inevitably lead to a fall in the real estate market. The economist Alain Trannoy hardly believes in ” a sharp rise in the ECB’s key rate, especially if Europe is on the verge of a “stagna-recession” ».
The main reason for anxiety comes, according to him, from the other side of the Alps. Italy is (pre)occupied with elections that will constitute its future government. ” If the Italian right comes to power and pursues a policy, let’s say “adventurist”, the rates on the Italian debt will soar again and there will surely be a new sovereign debt crisis in the euro zone as in 2011-2012 »warns the academic Alain Trannoy.
In the early 2010s, the French real estate market suffered from the crisis. Real estate prices had plummeted by up to 2% year-on-year in 2012… except in Paris, which national and international customers had consistently voted for. The sovereign debt crisis had therefore benefited Parisian real estate, a “safe haven” par excellence.