Real Estate/Rising Prices: The real estate purchasing power of the French is better than that of Belgians and Germans

Real Estate/Rising Prices: The real estate purchasing power of the French is better than that of Belgians and Germans

Higher interest rates lower the purchasing power of real estate buyers on credit, as the cost of financing them is higher. Real estate prices vary, as do mortgage rates offered in France, Germany, and Belgium. Thus the loss of purchasing power of credit buyers varies depending on.

The French, again the most protected from rising prices?

It is surprising. To read the news regarding the real estate market, it is better to be a soup mug in France. The new real estate market is on the verge of collapse, erosion thresholds are missed and the prices of new properties skyrocket. On the old side, higher material prices have caused a chill, and thermal renovations aren’t ready to finish. Against the background of high interest rates, we are told that the real estate market in France is the best market that maintains the purchasing power of buyers on credit (at least by comparing only with Belgium and Germany). Stats sometimes annoy.

These mortgages are very expensive…

Between January and July 2022, purchasing power in square meters [1] It decreased by an average of 5 sq m in France (1 sq m for Paris), dropping successively from 64 sq m to 59 sq m and from 19 sq m to 18 sq m. In Germany, the purchasing power loss is 13 square meters (for the whole country, from 62 square meters to 49 square meters) and 9 square meters for Berlin (from 41 square meters to 32 square meters). But the Germans buy their real estate mainly with cash, while the French use credit in 80% of cases.

In Belgium, the real estate bubble is lower. Real estate prices are easy to find. Higher prices have a greater impact on purchasing power per square meter, simply because the surfaces are larger. Thus, Belgium shows a less pronounced decrease in the purchasing power of real estate compared to Germany: – 14 m2 on the whole territory scale (from 102 m2 in January 2022 to 88 m2 in July 2022) and – 10 m2 for its capital, Brussels (from 70 m2 to 60 square metres). In percentage terms, the statistics are more straightforward, with the decrease in purchasing power in Germany being the most obvious.

The purchasing power of the property

Real estate purchasing power, evolution from January 2022 to July 2022
nation Average space in January (m²) Average area in July 2022 (m²) square meter development change in %
Germany (national average) 62 49 -13 -20.96%
Germany Berlin) 41 32 -9 -21.95%
Belgium (national average) 102 88 -14 -13.72%
Belgium (Brussels) 70 60 -10 -14.28%
France (national average) 64 59 -5 -7.81%
France (Paris alone) 19 18 -1 -5.26%

(Source: Aviv Group)

Interest rate 3% end of 2022

The interest rate hike is not ready to stop. Currently, the average monthly increase is at least 16 basis points in France. With the beginning of a return to the traditional monetary policy of the European Central Bank, the Governor of the Bank of France announced that real estate interest rates in France could reach 3% by the end of 2022 (versus 1.7% today). “change of this size“The Tel-set Scale is estimated,”It could mean a mechanical 13% decrease in the ability of households to buy compared to the current situation. »

Prices are not dropping yet, but…

Between January and July 2022, property prices rose the most in France (+1.7%), Belgium (+1.8%) and Germany (+3.4%). However, a nuance in the barometer, ” The first signs of a slowdown, both in terms of activity and prices, began to appear in the first half of the year in some countries such as France and Germany. In France, the Paris market lost 0.4% to 10,192 euros per square meter (between January and July 2022). While across the Rhine, prices fell in Hannover (- 1.8% to 4,019 Euros per square meter), Essen (– 0.5% to 2,954 Euros per square metre) and Düsseldorf (– 0.9% to 5,206 Euros / square metres). On the other hand, Berlin is still on an upward trend (+3.5% to €5,071 per square metre), as well as in Belgium, Brussels (+4.4% to €3,428 per square metre).

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