An unprecedented fall for 15 years. The real estate purchasing power of the French has decreased in 2022, according to calculations by the Superior Council of Notaries presented on Thursday, December 15. The reasons ? The combined increases in interest rates and prices in the old. On average, by going into debt over 20 years with a monthly payment of up to a third of their disposable income, French people in mainland France can acquire a home of 80 square meters. This is 4 square meters less than in 2021.
Will the trend continue in 2023? In an attempt to identify future trends, L’Express interviewed various players in the real estate sector. Orpi, the leading French network with 1,360 real estate agencies and 9,000 employees, has seen a price increase of 6% nationally since January 2022. Last November, Yann Jéhanno, president of the Laforêt network, mentioned +4.7 % nationally over the first ten months of 2022.
But the real estate market is changing. Guillaume Martinaud, president of the Orpi cooperative, has observed a slowdown in prices since September-October. According to Immonot, a real estate advertisement portal published by notarial offices, only 2% of notaries still predict an increase in housing prices over the next two months, 54% expect a drop and 44% their maintenance at the current level, according to a survey conducted in November. Opinions were more divided in September: 49% predicted a fall in prices, 45% stagnation and 6% an increase. “We have entered a new cycle which puts an end to the seven years of rising prices in France. And it will continue next year”, advances Thomas Lefebvre, scientific director of Meilleurs Agents and seloger.com.
“A correction in sales and a fairly clear slowdown in prices”
The significant price increases observed in large cities such as Lyon, Nantes or Bordeaux are now over. Some cities could, however, see prices rise further, like Chambéry or Caen, notes Guillaume Martinaud. “There is a real rebalancing and everyone is doing a little better,” he observes. The leader of Orpi notes that the health crisis has had an impact on the sector, with French people leaving large cities to move to medium-sized towns “in order to have space”. “With the development of teleworking, people have understood that they could live elsewhere and otherwise,” he notes.
According to a study by Crédit Agricole on the real estate market unveiled on December 7, the prices of the old ones will on the other hand continue to increase. But this increase should slow down, dropping from 4.8% on average in 2022 to 2% in 2023. Sales of existing properties should fall by 5% in 2022 then 9% in 2023; 10% and 5% respectively in new buildings. They would however remain very high: the forecasts count on one million sales in 2023. That is to say a level equivalent to 2021 and 2022.
“The market will remain fairly strong next year, but the slowdown that began a few months ago should intensify,” predicts Crédit Agricole. According to the bank, “the slow but steady rise in housing loan rates, the impact of the conflict in Ukraine, the deterioration of the economic situation and the insufficient supply of new builds would lead to a correction in sales and a fairly clear slowdown prices.”
2023, “a year of market regulation”
Rather than a market collapse, professionals expect a year 2023 marked by a “return to normal”. For Guillaume Martinaud, this “will be a year of market regulation”. No drastic drop in prices is therefore to be expected. “For prices to collapse, there would have to be a massive influx of goods on the market. Which will not happen”, advances Maël Bernier. According to the spokesperson for Meilleurtaux, the market will be mainly driven by people “forced” to sell a property due to the vagaries of life, while sales for reasons of “comfort” will decrease.
For Thomas Lefebvre, the real estate market will “be a little stuck” in the coming months. “Sellers will have to design price reductions,” he notes. An opinion shared by Guillaume Martinaud: “People who really want to sell will have to be reasonable and listen to the agencies.” “The real question is how long it takes to accept new market conditions: will sellers accept them quickly or will they resist until the last moment?” Yann Jéhanno also wondered in November.
Buyers are in fact increasingly in a strong position to negotiate prices. At least…. Those who can buy on credit. “Accessibility to bank loans is the sinews of war”, underlines Guillaume Martinaud. The rise in interest rates that began at the start of 2022 should continue in 2023. While the average credit rate (excluding insurance and on a 20-year loan) already exceeded 2.3% in most banks in November, Maël Bernier sees these interest rates reaching an average of 3% from the first half of next year.
“We cross our fingers so that the banks do not increase their rates too much because currently, 40 to 50% of households can no longer borrow over long periods of 20 to 25 years”, remarks Damien Raquidel, managing director of ConnectCredit. According to this Paris-based broker, average mortgage rates should gradually reach 3.5% over the course of the year, before stabilizing.
A “puff of oxygen” expected in January
To explain the difficulties of individuals to borrow, brokers regularly accuse the usury rate, this maximum legal rate that banks are authorized to practice when they grant credit. A rate adjusted every three months by the Banque de France. “The market is at a standstill for certain profiles because the wear rate has been exceeded,” laments Damien Raquidel. “It is quite fatal for us because no discussion is possible with the bank in the event of an overrun. The file is then refused”, he recalls.
This usury rate, intended to protect individuals from abusive borrowing terms, was raised from 2.57% to 3.05% on October 1, 2022 for loans of 20 years and over. Will the next planned increase, on January 1, 2023, be of the same ilk? “I think this attrition rate will increase to 3.5%, a figure that would have been perfect three months ago,” says Maël Bernier.
This January increase will be a “breath of oxygen for the conditions for granting loans”, wants to believe Damien Raquidel, who outlines the trends for the months to come. The further revision expected in April would result in a “real acceleration of the market”. At that time, some banks “which had closed the floodgates of loans should start to reopen them slowly”, he hopes. Finally, in July, the probable new increase in the rate of wear and tear would mark “the return to normal”, allowing all the banks to take charge of property acquisition files.
Next year will also be marked by the entry into force, on 1 April, of the obligation of an energy audit for any deed of sale of a detached house or a class F and G single-ownership property, such as provided for by the climate and resilience law. “This law will regulate the market”, predicts Guillaume Martinaud.