After two years of super dynamism, the market in Limoges is slowing down
How is the real estate market behaving? Jay Hockey publishes his second quarterly gauge, detailing real estate market numbers in 37 cities in France.
Rising mortgage rates, accelerating inflation, changes in the French political landscape… In this pivotal period, how is the old real estate market behaving? What major trends have you noticed over the past three months? And what are the future prospects?
Guy Hoquet l’Immobilier provides answers through the second edition of the “Guy Hoquet Real Estate Barometer” by analyzing all the old residential properties marketed by professionals and individuals. The goal: to take the pulse and provide strategic benchmarks around legacy market tension with a holistic view of supply.
So far, so good …
The first major lesson from this metric: Selling price stability appears to be on the horizon. In fact, if the second quarter of 2022 showed an increase of + 6.8% Compared to the same period in 2021, this increase remains moderate compared to the first quarter of 2022: + 1.7%. However, inflation is still very noticeable on house prices: + 3.6% increase in the price per square meter compared to the second quarter of 2021. Only the tourist areas and the capital are still benefiting from their attractiveness to buyers: a sharp increase in rental prices in Paris by + 5.5%, And in the Mediterranean: Marseille + 7.3% (compared to the first quarter of 2022), Nice with +11%, Perpignan + 7.4%.
…but weak signals are piling up and a market reversal looms
Mid-sized cities are already off, after two years of super dynamism: Limoges, Clermont-Ferrand, Dijon, Grenoble, Caen and others show lower values per square meter compared to the previous quarter.
Meanwhile, rental yields are constrained by the general rise in selling prices, with a GNA of 4.2%. It is too early to see the effect of a correction on rents, as the increase is now set at +3.5% over 1 year ago 1Verse July 2022.
The average purchase budget, all kinds of goods combined, is still growing + 3.6% Compared to Q1 2022 (for settlement at €343,124): Sellers haven’t taken context yet.
Force sellers to review their claims
Rising mortgage rates and the effect of inflation on the purchasing power of the French will force sellers to review their claims. To purchase a property at €350,000, when borrowing rates were 1% over 25 years, the buyer incurred a €75,000 credit charge. Tomorrow at rates of 2%, the cost will rise to 125,000 euros: this is an increase of 23 and will then represent a third of the selling price. However, the number of credit denials is increasing: 16% rejection rate over 2e Quarter versus 4% at the end of 2021! In this context, the amount of down payment requested by banks has been increased by + 30% Report at the beginning of the year: Where the files were validated with a contribution of €47,000 at the beginning of the year, the amount requested is now €67,000
“Buyers and Sellers: Who will foot the bill? If the indicators are green right now, signs of a paradigm shift should catch our eye. Concretely, as credit rates increase, buyers alone will not be able to absorb the full weight of this increase,” says Stefan Fritz, President of Guy Hoquet l’Immobilier, “Sellers will have to review their claims.”
Source: Finance Conseil Study, July 2022