Real estate: after two years of decline, should we expect a further drop in prices?

Prices of old housing fell by 5.5% between mid-2023 and February 2024, details the National Real Estate Federation. But the drop was only 2.1% on November 1, over one year.

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Looking for an apartment to buy, to take advantage of credit rate falling of 75 basis points since January, you have checked the box “ads whose price has changed” on specialized real estate sites. Good luck to you because after two years of real estate crisis, prices have indeed fallen in the old residentialIn France. They fell by around 5% between mid-2023 and February 2024, details the National Real Estate Federation (Fnaim) in its economic report published this Monday, December 2.

The consequence of the quadrupling of credit rates between the start of 2022 and the start of 2024, which led many households to postpone their loan projects until laterreal estate purchasethe banks refusing to finance them. At the end of August 2024, only 780,000 sales had been made over 12 months, i.e. a fall of 18% over one year, the sharpest in 50 yearsunderlines Fnaim. Which forecasts a sales plunge of around 10% over the whole of 2024, to 800,000 units, in accordance with its initial forecasts, “among the most pessimistic on the market”.

A stabilization of real estate prices

However, the prices seem «se stabilize» since spring 2024, due to “housing shortage” on the old market, aggravated by the drop in new constructionnotes Fnaim. Yes, the need for housing remains high in France, the drop in credit rates since the start of the year and the decline in prices have somewhat revived property sales. As a result, as of November 1, the drop in prices of old housing in France was only 2.1% over one year.

A decline which concerns the almost the entire territorystarting with Paris (-3.1%) and the 10 largest provincial cities (-3.5%). This is only an average because metropolises like Nantes, Lyon and Bordeaux have seen price drops of 8%, 6% and 4%, respectively. “The market has fallen more in large cities because buyers’ sensitivity to loan rates is greater there”high sales prices in these metropolises requiring substantial borrowing, analyzes Fnaim.

Goods that should no longer lose value

But these price drops “do not fully compensate for the surge in rates” between the beginning of 2022 and the beginning of 2024, observes Fnaim. And this, even taking into account the increase in household income, “not negligible over the last two years”recognizes Fnaim. For the latter, “prices would have to fall by another 5.5% so that households regain their real estate purchasing capacity of 10 years ago”when credit rates began to fall in 2015, falling to lows of between 0 and 1% between 2019 and 2021.

A rather improbable scenario: in this housing shortage market, “goods should no longer lose value in the coming months”predicts Fnaim. What “should reduce buyers’ wait-and-see attitude”, she anticipates. In fact, if there are no more price drops to be expected, you might as well buy now to take advantage of credit rates that are still falling in December. Fnaim is thus banking on a “stagnation (of sales) at a low level in the coming months”after three years of decline.