Here are 8 reasons why the real estate market is at a standstill

Real estate players are unanimous: the housing sector is in crisis. The housing minister himself also talked about a “social bomb” being prepared from autumn 2022, mainly due to inflation. In an effort to neutralize it, the government launched extensive consultations with experts and associations within a committee called the National Housing Refoundation Council (CNR). His work, the conclusions of which must be published on May 9, will provide a plan aimed at facilitating access to real estate or renting, reviving the construction of semi-detached housing and strengthening the policy of renovation and development. ecological transition of buildings. But what reality is hidden behind this “crisis”? Here are 8 key numbers that show the current difficulties in housing affordability.

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3.30% real estate loan rate

LThe average loan rate offered by banking institutions in April 2023, according to broker Vousfinancer, rose to 3.30% for loans of 20 years or more. This represents an increase of more than two points compared to the end of 2021. And this increase in lending rates inevitably caused a decrease in the purchasing power of households, since on average one point increase in rates corresponds to a loss of loans. capacity 10%. The rise in mortgage rates, combined with the usury rate – the maximum rate at which banks are allowed to lend – being too low, has driven the most modest households out of the credit market. According to the Banque de France, loan production has been falling sharply in recent months and even reached its lowest level since 2015 in March 2023. These difficulties in accessing credit largely explain the decline in the number of transactions.

0.9% price drop in 2023

Usually, the real estate spring is a sign of renewed activity on the real estate market. This year, however, prices in the metropolises are rather stagnant or even falling. According to the Meilleurs Agents estimate, prices fell by 0.6% across the country in April over the month. Since the beginning of the year, prices have even fallen in the country’s 10 largest cities (-0.9% on average). This downward cycle, which has been going on for several weeks, is largely explained by the decline in household purchasing power due to rising rates. The drop in prices is particularly spectacular in Paris, where prices fell by 5.1% in one year. Unheard of since 2008.

Transactions are down 15% compared to 2022

According to Meilleurs Agents, it has monthly sales volume in March 2023 it fell by 15% year-on-year.. A spectacular decline, which can be explained mainly by the economic context unfavorable for buyers, characterized in particular by inflation and a sharp increase in credit rates. And the situation is expected to worsen in the coming months, as Meilleurs Agents expects the decline in activity to accelerate until the end of 2023, due to multiple sales promises that do not materialize before the notary. The annual number of transactions could fall below the symbolic threshold of one million in the coming months.

Sales times increased by 10% for the year.

This is one of the logical consequences of the drop in demand associated with difficult access to credit. Sales times are lengthening as it took an average of 67 days to sell a home in France in April 2023, compared to 61 days a year ago, according to Meilleurs Agents. “Sellers are having difficulty reducing prices to match the reality of the market, and at the same time buyers are having great difficulty accessing loans,” analyzes Thomas Lefebvre, scientific director of Meilleurs Agents. This situation causes delays and increases sales times.” This extension of sales times, on the other hand, benefits the buyers, who increase their negotiating margin… without the discounts obtained compensating – by far – for the increase in the cost of credit.

New construction down 26.7%

Number of building permits awarded for the quarter December 2022/February 2023 compared to the same quarter 2021-2022 down 26.7% for the construction of new houses and apartments. Urban projects decline due to several factors. Above all, construction site costs have exploded due to rising energy prices, raw materials and a lack of usable land. Increasing credit rates then greatly reduced the financial possibilities of buyers, who massively turned away from new housing, which often became too expensive. A real scissor effect that could put up to 100,000 jobs at risk by the end of 2024, according to the French Construction Federation.

2.3 million households are waiting for social housing

2.3 million households are waiting of social housing today, according to the Social Union for Housing (USH). This is 100,000 more than last year, describes the organization, which brings together 580 HLM operators. Low-income households are flocking to this life-saving housing, the supply of which is currently growing less quickly than the demand. Only 95,000 new building permits were granted to HLM offices last year, with the executive’s annual target of 125,000.

Unpaid rent is growing in two-thirds of HLM organizations

Two thirds of HLM offices according to USH, saw an increase in the number of households in financial difficulties in December 2022. The worrying trend is partly related to the explosion of gas and electricity bills, which have hit the most modest households hard. Rent unpaid for more than three months has increased by more than 10% for almost half of social landlords surveyed by USH.

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