Real estate: the inevitable drop in housing prices

Real estate: the inevitable drop in housing prices

We might get tired of thinking about the hypothesis, as it hasn’t been verified in the past: there hasn’t been a fall in home prices. We had the right to expect this to happen during the pandemic, which has brought the national and global economy to a standstill by weakening players. Rather, it was legitimate to think that, over the past decade, the valuation of housing in the most attractive market had reached a peak level. So much so that the most optimists, those who have always expected the opposite, on the basis of insufficient supply in relation to demand, and also on the basis of the constant attachment of the French to stone, smile at accurate predictions or vice versa.

Read also

Real estate prices in 400 French sea resorts

For these, we will mention the same two facts … which give new importance to the expectations of lower prices. When it comes to the pandemic, how can we forget “whatever the cost”? Were it not for comprehensive public assistance, especially the loan guaranteed by the state, jobs would be at risk. Wages were also maintained despite the part-time shifts. The self-employed have benefited themselves from the compensation for operating losses. Moreover, banks took into account remittance income and continued to lend to first-time buyers and investors alike. Clearly strong payments were introduced and allowed the real estate market to continue its course, and prices continued to climb. Especially since the financial profile of buyers has continued to increase in terms of income and social and professional categories. The proportion of first-time buyers, workers or supervisors has decreased dramatically. In short, the market has turned into restoration.

Above all, the ease of access to credit hides misery, if we may use that expression here…for indeed, it is rather wealth and value added and it is a matter of twenty, on 80% of the national territory. We know that incomes have not been followed and that the average household effort has increased and decreased the remainder of their livelihood without interruption. The housing price now accounts for more than six years of net household income in France, compared to half in Germany. The budget for housing flirts at 40% for most buyers, and incorporates operating costs and taxes.

Read also

Real estate: the most profitable cities to invest in

We are entering without transition into a period when these two dampers disappear. The welfare state would no longer have more money and without reducing its bad public deficit, France would be so poorly rated that it would always borrow more expensively, and thus would increase its debt and put itself in an unsustainable position. We are no longer dependent on universal public aid and the Economy Minister does not utter his words in this regard, to the point of declaring differentiated energy tariffs according to consumer income, which is the preferred solution to the downside value-added tax. Certes, la future loi sur la protection du pouvoir d’achat va atténuer la douleur, mais les augmentations de prix des carburants, de l’énergie domestique et des denrées alimentaires rognent de 15 à 20% le reste à vivagesre des carburants, app les mén In fact. As for real estate loans, they are affected three times, by the precautionary criteria of the Supreme Council for Financial Stability, which has had regulatory power since January 1 of this year, by higher interest rates – they rise to 2%, which corresponds to to double in approximately six months—and at a rate of wear that, even after increasing it, will automatically alienate the most fragile of borrowers. To date, loan denials probably exceed a third of the files submitted.

Read also

Mortgage credit: interest rates are rising, what level can they reach at the end of the year?

Under these unprecedented conditions, a downward correction in prices is inevitable as they are increasingly out of line with income trends, in urban and suburban areas, in a large part of medium-sized cities and even in some rural communities detected by Covid. As desirable in terms of their quality of life. Everywhere it will be necessary for the prices to reach the French who have lost their loans. Real estate does not escape this basic economic logic, and this time, it will not escape the taste of stone nor the favorable tensions of show and sellers. Admittedly, these phenomena, which cannot be denied, will limit the regression and in no way should we imagine a fall. The significance of the fall is measured by the loss of purchasing power of individuals and families. It is clear that if cumulative increases in basic necessities and interest rates affect the contributing capacity of acquisition candidates by 10%, it is possible for prices to fall to that level within twelve months.

>> Our Service – Save money with our mortgage comparison test

Last week, the big names in residential transactions in our country, FNAIM, Century 21 or Guy Hiccups gave their numbers. We feel, as always, in professional speeches, reluctance to speak of dips, in volumes as in prices. They do not deny the slowdown in sales and expect a downturn. The words are chosen, with some nonetheless with a new boldness, evoking for example the need of sellers to temper their claims. We will say things freely here: lower prices, in the harsh context we live in, are inevitable. We can’t regret it, as it has increased for nearly twenty years, temporarily corrected by the 2008 subprime mortgage crisis, to the point that residents and the real estate community have grown accustomed to it. This method risks making the defenders of “the value of the shelter you keep from any fall” and “withstanding in all circumstances” smile again: the better. In these trying times, a smile has a price, and it’s a safe bet that that smile will go up dramatically.

>> Real estate prices and rents in 100 cities in France (Capital Index / El Fanem / Clamors)

Leave a Comment

Your email address will not be published. Required fields are marked *