Last year was a turnaround for the real estate market. After two decades of euphoria, trading volume has collapsed. In 2023, barely 850,000 sales were concluded, compared to 1.1 million in 2022. A large part of this decline can be explained by the disappearance of investors. “Since mid-2022, they have all disappeared, even in the cities which previously concentrated requests,” sighs Julien Karakoc, director of the Rive Ouest agencies in Paris and the inner suburbs.
However, real estate retains its advantages: it is the only asset in which it is possible to invest with a limited initial investment thanks to credit; it brings additional income and, in the long term, it offers capital protection. Although this market remains complicated, the three main obstacles that hindered it are in the process of being released.
1. Prices remain too high
Contrary to predictions, the sharp decline in sales volume in 2023 has not led to a collapse in prices. Last year, according to Century 21, the average price reduction in France was only 1.7% for houses and 3.4% for apartments. In the three cities where the crisis is most pronounced – Bordeaux, Lyon and Paris – the declines reached 11.5%, 5.7% and 5.5% respectively over the same period. These discounts still do not make it possible to compensate for the surge in credit rates, which has led to a loss of purchasing power for borrowers. “The resolvability of buyers necessarily requires greater price reductions,” insists Charles Marinakis, president of Century 21 France. These should therefore continue this year, or even accelerate, without anyone being able to determine the extent and speed of this correction. Faced with so much uncertainty, many investors are putting their projects on hold.
Our advice : From month to month, the stock of goods for sale grows and demand continues to reduce. If you are a buyer, you now have choice and, above all, time to compare available housing. If you have capital to invest directly, the period is even ideal, since you will negotiate discounts without difficulty. “Some investors manage to buy 20% below the displayed price by waiving their credit condition,” says a Bordeaux real estate agent. Even with a loan, you will be able to find profitable rental properties, provided you target those that are least sought after by owner-occupiers. This is particularly the case for apartments located on the first floor and above the third in buildings without an elevator, or even housing to renovate. If they are located in a dynamic metropolis and if you bring them up to date, this will not prevent you from renting them quickly due to very high rental tension.
2. Credit is difficult to access
While credit rates flirted with 1% at the start of 2022, they rose, according to the Banque de France, to 2.12% in December 2022 and to 4.11% at the end of 2023. This surge was coupled with a tightening of conditions for access to loans, because banks have strictly applied the solvency criteria of the High Financial Stability Council (HCSF). Immediate consequence: the volume of home loans, excluding renegotiations, fell by 40% in one year.
Our advice : Since December 2023, interest rates have been in a stabilization phase. “On average, it is possible to borrow at 4.20% over twenty years, and even at 3.80% with a good profile,” indicates Cécile Roquelaure, communications director at Empruntis. Rates that are certainly higher than two years ago, but which remain lower than inflation, which hovers around 5%. Today, “banks lend more willingly to serious investors. It is up to them to demonstrate that they are buying in an area where rental demand is strong, that part of their monthly payment will be covered by the rent and that they have an amount of residual savings to cope with hard times”, specifies Cécile Roquelaure. Also, present to your banker a supported file, including rent estimates drawn up by professionals and, if the property requires renovations, quotes provided by craftsmen.
3. In new construction, Pinel has lost all interest
Since January 2023, the Pinel system – which will end in December of this year – has seen its tax advantage eroded. Thus, if you buy a new home in an eligible area and rent it for six, nine or twelve years according to the conditions of this system, you will benefit from a tax reduction rate of, respectively, 9, 12 or 14%. of the purchase price of the property, compared to 12, 18 and 21% before 2023. “This makes this type of investment significantly less attractive, so much so that savers are turning away from it,” notes Clément Chaillet, director of Guy Hoquet Nansouty , in Bordeaux. Too bad because, since the soaring cost of energy, the energy performance diagnosis (EPD) of housing is a criterion closely scrutinized by tenants. However, new apartments always display a result between A and C, i.e. the best marks on the scale. This will also prevent them from being subject to rental bans which will affect thermal strainers (classified between E and G) in the short and medium term.
Our advice : By buying new today, you enjoy peace of mind since you will rent easily. In addition to good DPE, new construction generally offers elevators, parking and outdoor spaces, which are very popular with tenants. You will also not have to anticipate costly co-ownership work in the next ten years. In addition, sales of new homes having collapsed, developers are offering significant discounts. “They are also open to serious and substantiated negotiations,” notes Pierre Brunet, wealth management advisor at Alter Invest. So you can find some nuggets. For example, a three or four-room apartment is worth between 3,400 and 4,000 euros per square meter in Aulnay-sous-Bois (93), at Bouygues, while a huge studio is priced at 3,400 euros per meter square in Bordeaux (Vinci). Or prices similar to quality old ones in the same city!
Additional tip: by setting your sights on a three-room apartment or more, your negotiation margin will be greater, because this type of housing sells less well. Finally, don’t hesitate to do simulations. Sometimes “the net rental profitability is higher by renting at the market rate without tax advantages, rather than by offering your property at a capped rent to benefit from the tax reduction”, notes Christophe Chaillet, director of heritage engineering at CCF. Enough to look at the new with a different eye.
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