Fixed.  The real estate purchasing power of the French is collapsing!

Fixed. The real estate purchasing power of the French is collapsing!

Since January, with mortgage rates up 0.5 point, households’ ability to borrow has fallen by 5% in France. This increase in interest rates, along with rising prices in almost all major French cities, is leading to a loss of real estate purchasing power, note Meilleurs agents who specialize in online property appraisals. According to their most recent scale *, large cities have lost between 1 and 5 m² since the beginning of the year, that is, on average – 3 m².

Strasbourg: loss of 5 square meters of purchasing power

The city of Strasbourg is at the top of the ranking of cities where, unfortunately, the purchasing power of real estate has declined the most since January. Reasons: Prices posted the strongest national increase since the beginning of the year (+4.7%). At an additional rate of €177 per square meter (€3,730 per square meter on January 1, 2022, compared to €3907 per square meter on June 1, 2022) and €8,758 less in borrowing capacity (€170,161 loan on January 1, compared to €161,403). June 1) In just five months, real estate candidates have lost 5 square meters of purchasing power of real estate in Strasbourg due to high loan rates”, analyzes Meilleurs Agents.

The same composition in Marseille with a 2.5% increase in prices since the beginning of the year, along with interest rates, that is, a loss of purchasing power by 4 square meters.

Leon and Lil Wren limit the break

In Lyon, Lille, Rennes and Nice, the loss of purchasing power of real estate is limited to -2 square metres. While it is – 3 square meters in Bordeaux, Nantes, Montpellier and Toulouse.

Paris: only – 1 square meter

In the capital, if lower prices were not enough to offset higher interest rates, it only caused buyers to lose 1 square meter.

Wait for the price to fall to increase the purchasing power of the property?

For the best proxies, be careful not to be too greedy. To maintain the same purchasing power of real estate, “prices have to fall significantly to compensate for the increase in prices. For example, at the beginning of June, just to erase the rise in the last months since January, prices should have already fallen by 5%, while at the moment they have developed at a rate of + 1.3% in France … ”, he notes.

*The purchasing power of the property is calculated for a representative family with a middle income in the city, taking out a loan for 20 years, with an effort rate of 33% and an interest rate of 1% in January 2022 and 0.5% in June 2022.

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