Real estate: confidence and the grip of rates

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France now borrows at rates comparable to those of Greece. “We cannot recommend enough that households who have a project do not delay and borrow as soon as possible,” urges Henry Buzy-Cazaux, president of the Institute of Real Estate Services Management.

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The work of the Minister of Housing and Urban Renewal, and that of the National Assembly before it rejected the first part of the budget, should not be undermined by the political agitation of the moment. This should not be done and the risk is now considerable. The confidence of the markets in our country is shaken, and we can wonder if we are not in an aporia, condemned to soon see a rise in interest rates which would be the worst news for real estate. In any case, the risk is such that we cannot strongly recommend that households who have a project do not delay and borrow as soon as possible. Demonstration and strategy proposal.

Interest rates are about confidence, which the public often doesn’t measure. Our country, like all others, borrows money on world markets and the rates granted to it are fiduciary in nature. Clearly, lenders estimate the risk of payment default in the event of difficulty in our country and protect themselves against it by placing rates at a more or less high level. Banks do not act differently, beyond the deposits in their hands from their clients’ accounts, when they have to refinance and seek liquidity to lend to their borrowers. The news has just broken: we now borrow at rates comparable to those of Greecewhich appears to be a bad student in the European class, with a staggering debt and an ability to reduce it considered very weak by economic observers. To take another reference, the spreadthat is to say the difference between the rate at which Germany borrows, and us, has never been so high and flirts with 100 basis points, or 1% rate. Never seen before.

Malicious actions for housing

However, for several months, the French situation has given hope, and our rates have been trending downward. For what? Because France had made two advances, starting from a terribly degraded situation economically and politically. We first succeeded in stabilizing our regime, disrupted by the untimely dissolution of the National Assembly by the President of the Republic on June 9. A government was able to be formed with great difficulty, and it began to write the scenario of a reduction in public deficits, under constraint from Europe. The budget for 2025, with a reduction of 60 billion euros compared to the previous one, is part of a virtuous trajectory, leading us in 2029 to a deficit of less than 3% of our gross domestic product. For housing, between the basic copy of the executive, the efforts provoked by Valérie Létard in agreement with the deputies, we wrote the scenario of support for the recovery by the State, certainly not to the extent of the descent into hell that the sector knows, but honorable in the current budgetary context.

But now, nothing is going well, and the Prime Minister is exposed to a motion of censure that a majority of deputies could vote for at the start of the week. For what? Because the government’s choice of method to return to a certain budgetary orthodoxy is disordered and unfair. It is indeed unfair to want to reduce deficits by overtaxing businesses and households. For housing, there are many malicious and unwelcome gestures when the market is already sluggish: project of increase in transfer taxes for valuable considerationproject to broaden the tax base for those subject to the real estate wealth tax, project to capture 5 billion from local authorities inevitably announcing an increase in property taxes and other taxes on housing, particularly for vacancy , plan to tax capital gains on the sale of main residences within five years following their acquisition, all this against the advice of the Minister of Housing… The list is long, and it only concerns residential real estate. In all areas of the game, the executive is ready to tax and tax again. Ultimately, the copy is illegible: the French, owners in particular, are being demanded to make an unbearable contribution to reducing their country’s public deficit.

No housing support will offset a rate hike

Meanwhile, the state’s lifestyle is not reducing and the majority of households themselves want, according to the most recent Elabe poll, the fall of the Barnier government. In fact, the government, whatever happens, has lost and the confidence of the financial markets is in the process of being permanently withdrawn from us. If, to avoid the motion of censure, Michel Barnier concedes to going back on the tax levies, which are indeed poorly received and misunderstood by the French and a major part of their national representation, then our commitments to reduce the public deficit to acceptable levels will not will be neither sustainable nor held, and interest rates will rise. No housing support measure, if decided and voted on, will compensate for an increase in rateswhich will bid on the purchase of new or existing homes, for investors or first-time home buyers. And if the government stays the course, it will be censured and fall, creating a political slump that will spook markets and send rates higher. In short, the country is caught in a rate vise.

In reality, in a few hours the government would have to take a direction from which it has turned away: focus on the revival of an activity which continues to decline. Envy is absent from the country, among individuals and within businesses. Failures and layoffs are affecting the housing sector like so many others. At the same time, drastically reducing the number of civil servants and streamlining institutions would be beneficial. We are becoming a nation without hope or breath, and housing is one of those lungs that have always made the country’s economy breathe while giving happiness to households. The worst thing would not be that the government stumbles, it would be that public opinion loses all faith in political elites who no longer look at the horizon and glue their eyes to the dashboard, without love for the future. Housing leads the French to plan for twenty or twenty-five yearsthe duration of a loan, the promoters to draw ten-year perspectives to buy land and imagine an operation, the managers to perpetuate the assets, and now these actors are offered a short view, as if we had to die tomorrow.

No truce from confectioners for souls of good will in real estate

There is only one virtue to these errors: they can only hasten the realization of projects, to take advantage of very good credit conditions over the coming weeks Again. What happens next is very uncertain, and unless there is a fundamental change in direction, it will rather doom France to economic disqualification. There will remain the national genius and the strength of character of our compatriots and professional actors to redress the housing situation… if the public decision does not dissuade them and does not exasperate them. Watch tirelessly and convince: no respite from confectioners for intermediate bodies and souls of good will in real estate. The moment is serious.