is this the right time to invest?

The acquisition of properties with the aim of renting them allows an investor to create a non-negligible source of income. The rental investment differs from other supports thanks to bank loans: the rents cover the monthly installments of the loan. Therefore, without affecting his finances, the investor can build wealth and, in the long run, generate additional income. Although rental investments have always been considered reliable and profitable, the dynamics of the economic market mean that some periods are more favorable than others to invest. Therefore, today we are interested in the state of the rental real estate market in 2022.

Rental investment in the post-covid era

If you are new to real estate, take some time to learn more about rental investments, how they work and how they work. This will make it easier to understand the problem of market dynamics.

As you have seen, the housing market has been hit by the health crisis, particularly as a result of confinement and the accompanying restrictions. Real estate transactions were effectively paralyzed globally during the 2nd quarter of 2020. But at the same time, the pandemic has redefined the priority of the French: the acquisition of properties offering a comfortable living environment.

The cards of the real estate game have been reshuffled in a way. As the needs of the French have evolved, the attractiveness of geographic sectors followed suit. In 2022, research on rental investments is mainly aimed at:

  • Rural areas close to large cities.
  • Periurban crowns.
  • Medium-sized cities with interesting economic dynamics.

Despite the health crisis, 2022 is a crucial year for a successful real estate rental project. In fact, thanks to the relaunch of the market, some cities are becoming real centers of attraction, some of which are located in areas affected by rent control. They therefore have a double advantage: they maintain affordable prices while having great rental potential.

The dynamics of the real estate market

The market price they could be maintained, and therefore even increased, once health restrictions were lifted. The measures implemented by the European Central Bank have encouraged rental investments, facilitating access to real estate loans. Indeed, the interest rates offered by banking institutions had dropped dramatically last year, sometimes reaching values ​​below 1% (depending on the duration of the loan).

All of these factors are responsible for the surge in transaction volumes and property prices in the second half of 2020.

Only, since the beginning of 2022, we can only see the increase in real estate rates, caused by inflation. An essential process, so that the banks continue to have a certain maneuvering market. But the counterpart to the rate hike is thedownturn in the real estate market. According to notaries, the volume of recorded transactions is expected to reach one million by the end of the year and prices are expected to stabilize. For now, the rise in property prices is slowing down: 5% this year against 10% in 2021.

Although inflation is the cause of this change in dynamics, note that it has a positive impact on the borrowing rate. In fact, your income is re-evaluated according to it, while your bank loan is fixed. This means that you could borrow from a negative rate and the weight of the relative monthly payment will decrease.

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