It’s a Christmas present we didn’t expect, you know the one from that aunt that usually always works. You tear open the paper expecting to be downright disappointed, and then miraculously it’s much better than expected. That’s exactly what happened with mortgage rates reported by brokers last week, are falling, for the first time in two years.
The real estate rate is actually the cost of the loan, the higher it is, the more expensive the loan rate and the less money the bank will lend you. It was the sharp increase in this rate that blocked the market and transactions this year. Today it is an average of 4.2% over twenty years according to Meilleurtaux.
It’s simple, it’s four times more than last year. As a result, the number of shares fell, minus 21% according to FNAIM, the real estate brokers’ federation. That makes approximately 200,000 fewer sales than last year.
On the way to the revival of the real estate market?
At the moment, the decline in rates is minimal, but after that the signals are good. Inflation is coming down a little bit more every month, and that’s important because it drags property prices down with it. So they are definitely not going to return to last year’s historically low level, but it should stabilize at worst.
The government also promised assistance measures for first-time buyers, who are buying for the first time. This autumn, Economy Minister Bruno Le Maire announced on RTL the extension of the loan with zero interest. The state pays part of the interest on the loanthe system can save up to 30,000 euros, even the upper middle classes are eligible, it can change this and allow the banker to finance the file.
Falling prices
Another lever to loosen the market is the drop in prices. That’s good, it’s already started happening: 2 to 3%. For example, we returned to the symbolic bar of 10,000 euros per square meter on average in Paris, but above all LIndustry experts are unanimous: this decline will continue and even accelerate in 2024.
You should expect an extra 5 to 6% drop. It will be even up to 15% price reduction for heat filters, this poorly insulated item. The market regulates itself.
New in difficulty
All is not rosy, for example the new housing market is in big trouble as the prices of these housing units continue to rise. Due to the cost of labor and materials, construction sites are stopped. The problem is that if these builds don’t start again, real estate will suffer the consequences of the rebound a little later.
Energy renovation is also a challenge, the law at the end of next year prohibits the rental of poorly insulated properties. The fact remains that for notaries, for real estate agents, for brokers and especially for French people who dream of buying, the year that begins will most likely be quieter than the one that closes.