Prices on top, more expensive loans, record inflation (it just crossed the 5% mark) eroding the purchasing power of candidates to join and favoring a wait-and-see attitude: after an exceptional year 2021 (1,2 million signed sales and 5.2% price increase), The real estate sector must stop. However, there is nothing alarming for investors: real estate does not remain the most profitable investment in the market (about 4% of the total), but with borrowing rates still less than 2% per year, there is no risk of a rating downgrade. .
A lull period looms after seven years of increases in most municipalities. After the frenzy of buying in the years 2015 to 2020, a period when the value of a square meter rose by 20-25% in 80% of cities, we can expect the souffle to fall. Fail: Except for Paris, the price fell by 1.5% (to €10,600 per square metre), and prices rose again, from 4 to 6% in 2021, with a peak of over 12% in cities such as Caen, Le Mans or Tours.
Admittedly, since 2022, the market has slowed: buyers, as the bleak economic climate subsides and energy-efficiency standards to be respected, are fewer in number, and prices are more negotiable. Expert conclusion: Even if sellers continue to dominate, the price increase will not exceed 2% in 2022.
Real estate: prices and rents in over 100 cities in France
Stable market, including in Paris and major regional cities. There is no need to bet on increasing rents to boost their performance: the trend has been stable for ten years (average increase of 1% per year), including in cities such as Paris, Nantes, Toulouse or Marseille. The new rent control rules, adopted by an increasing number of “stressed” cities, and added to measures to limit resettlement, are not working in the landlords’ favor either.
But in comparison with subscribers to financial products, they at least do not lose purchasing power: rents for occupied real estate can be increased every year with an indicator based on inflation (that is, +2.48% for the second quarter of 2022).
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Prices are still affordable, but the terms of granting are more stringent. In the wake of rising inflation, credit rates have risen steadily since the start of 2022, at about 0.1 point per month. However, you can still borrow about 1.50% excluding insurance, which is a reasonable level, three times lower than current inflation.
Only downside: Faced with the threat of high unemployment and excessive indebtedness of families, the conditions for obtaining credit have been tightened (the maximum debt is 35%, at least 10% personal contribution, the repayment period is less than 25 years, etc.), excluding from the system more and more investors .
Mortgage credit: interest rates are rising, what level can they reach at the end of the year?
It is highly recommended to have unpaid rent insurance. Even if the unpaid rents are marginal (less than 2% of billed rents), it is the obsession of landlords, who, in 70% of cases, have to go to court to get their dues or property back. To avoid being trapped, while the deteriorating economic situation increases this possibility, there are two solutions.
The first is to request a joint guarantee from the tenant, i.e. a guarantor who will pay the rent automatically in case of default. And if the guarantor in question does not seem reliable enough? The second solution is always effective: “unpaid rent” insurance. You will find high quality offers for less than 3% of the rent collected.
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Stone prices will remain stable as long as credit rates remain reasonable
If prices have not stopped rising since 2015 (+3% per year on average), this is mainly due to cheap credit, the main fuel for real estate. With interest rates rising, 2022 should mark a change in trend, especially in cities where a square meter is now trading at more than 4,000 euros, such as Bordeaux, Lyon or Nice. But experts are unanimous: As long as we can sink into debt at less than 2%, the rating will not go down.
>> This article is a summary of the latest special edition of Capital’s private properties available on newsstands and on Prismahop
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