Buying real estate: the difficulties faced by borrowers do not bring down prices yet

The French real estate market is caught between strong demand and financing difficulties for borrowers. As a result, some properties no longer find their holders and the number of sales has decreased.

If you have a real estate project that requires a loan, this trend will not escape you: for several months, mortgage rates have been increasing, while grant terms have become tight. Double penalty for borrowers who also have to deal with the rate of wear blocking more and more files.

Medium-sized cities are popular

Under these conditions, a drop in prices in the real estate market was to be expected. However, the LPI-Se Loger مقياس Scale (1) July 2022 shows a rapid increase in prices. In the new prices are flying away, Especially due to the increase in construction costs. The price of a new home has increased by +5.2% over the past three months to €2,420 per square metre. The increase is lower for new apartments (+2.1% €6,035 per square metre).

In the old segment, prices increased by an average of +3.8% in three months. An increase mainly driven by homes (+4.3% vs +3.5% for apartments), evidence that the latter is benefiting from greater demand than supply. Be careful though: In urban areas, housing prices are falling, -5.9% Bordeaux in one year, -8.7% Rennes and up to -11% Nice! Far from being evidence of a lack of interest in this type of housing, these cuts show that above all else Borrowers are finding it increasingly difficult to afford these necessarily expensive homes, because obtaining financing is becoming increasingly difficult. In fact, second-time buyers (already owners), who are most likely to purchase these homes, are often blocked today by the rate of wear and tear, particularly due to borrower insurance.

The situation is ridiculous..these French are deprived of mortgages because of the wear rate

On the other hand, apartments are still popular, with price increases ranging from + 5.6% (Rennes or in the Aix-Marseille metropolitan area) to + 8.5% (Brest). But the LPI-Se Loger scale appears above all that Medium-sized cities (less than 60,000 inhabitants) are the ones that get the most out of the game. In cities like La Roche-sur-Yon or Laval, the price increase is +18% in one year. Thus, if the overall increase in France is +5.8%, then the medium-sized cities average +9.3% during one year. Evidence that borrowers no longer hesitate to turn to cities with slightly lower ratings so that they can implement their real estate project.

Save up to 70% On your borrower’s insurance

Higher rates and lower purchasing power…

However, if prices continue to rise, the number of transactions suffers from the current situation: tighter access to credit, higher interest rates, lower purchasing power. Usually, after a quieter month in May, individual purchases of older homes rebound in June, confirming LPI-Se Loger in its gauge. But this year, after an average month in May (sales down 20.9% in one month, versus -5.7% on average over the long period), June confirms that the current real estate market is going through a region of strong turmoil. Activity decreased by 22.8%. This downturn is very rare in June, and was only noticed in 2008 when the subprime mortgage crisis erupted.

Mortgage Loan: Find the Best Rate

(1) The published and signed average prices are calculated as a rolling quarterly average at the national, regional and administrative level and in towns of more than 100,000 inhabitants. In smaller areas (particularly regions), prices are on a rolling average annual.

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