All the more so since demand is hindered, even more than in the past, by the tightening of the bank supply and the increase in the cost of credit.
In September, in a still very unbalanced real estate market, signed prices fell slowly, by 0.5% in the last 3 months. This trend is frequent in this period of the year: especially after more than 6 months during which the increase in prices was rapid. At the same time, apartment prices rose slightly, by 0.3%, after a sustained increase for several months.
However, the increase has been rapid enough over the past twelve months that in September the signed price level stood at 6.1% higher than a year ago: 8.3% higher for homes and 4.6%. % more for the apartments. Because the market transformation continues: part of the demand penalized by the need for a greater personal contribution moves towards areas where prices are more accessible, reinforcing the pre-existing upward trends. ; while the competition between buyers with the best personal contribution is accentuated in the most sought-after areas, in a context of scarcity of supply.
A rapid increase in the price of the new
The decline in demand for new homes was rapid over the summer. With the increase in interest rates and a contraction in the supply of credit comparable to that of autumn 2008, in the midst of the international financial crisis, the realization of the purchases planned by individuals has become very difficult. While an increasing number of bidders have had to cope with a rapid and rarely observed increase in construction costs, even sometimes with the abandonment of construction sites due to deterioration of the production apparatus, they have been forced to abandon their project. .
However, the rise in new house prices continued, having strengthened since the end of spring. It was even fast on the domestic market, with a 3.0% increase in 3th quarter: After a sustained increase since the spring, the price level recorded in September was 13.0% higher than a year ago. After a year of strong growth, the prices of new apartments continue to rise quite rapidly, by 2.4% in 3th quarter, as in early summer: they are therefore 6.6% above the level of September 2021.
Weakening of prices in the old in some large cities
Frequently, during the summer, the rise in the prices of old apartments fades away in large cities. This year, the slowdown has been amplified by an exceptional decline in the supply of bank loans and by the continuing blockade of the resale market which has been degrading the fluidity of the market since autumn 2021.
Therefore, the prices fell during the 3th quarter (on a quarterly basis) in 35.0% of cities with more than 100,000 inhabitants: Bordeaux, Lille, Lyon, Nantes, Paris or Toulouse, for example. In general, in these cities, therefore, the rise in prices slows down over a year, on an annual basis. However, the seasonal decline in prices is often simply associated with a stabilization of the increase over a period of one year (and sometimes at high levels). : in Bordeaux, Lyon, Nancy or Toulouse, for example; and it cannot prevent a rapid increase over the span of a year, as in Rennes. But in any case, the cities affected by this summer decline are among the most expensive: either nationally or on their territory.
But the summer months were also synonymous with accelerating price increases: as in Annecy or Nice, which are among the most expensive, but which still benefit from the arrival of new wealthy buyers. Or also Besançon, Clermont-Ferrand, Le Havre or Limoges where the rate of increase is still increasing.
In total, the increase in prices is therefore 10% or more over the course of a year in 18.5% of cities with more than 50,000 inhabitants: in ¾ of the cases they are medium-sized cities or a maximum of € 2,500. / m². And the increase remains at least equal to inflation in 45.2% of large or medium-sized cities. While the drop in prices is observed only in 7.3% of these municipalities: either for particularly high prices (Levallois-Perret or Neuilly sur Seine) or, on the contrary, for very low prices (Calais or Tourcoing), on local markets ( very) depressed.
Rapid decline in sales over the summer
The number of old homes purchased by private individuals largely depends on the number of mortgages granted, which finance 89% of these operations. The decline in credit production, particularly marked during the summer, has therefore dragged down the existing domestic market.
After stall 1uh quarter of 2022 and despite the demand pressure observed in many territories, the thinning observed in 2th the quarter on purchases was not enough to reverse the market’s recessionary trend. The number of compromises signed on 1uh half year down by 7.4% at the end of June on an annual basis (by 18.6% compared to 1uh semester 2019). The decline in the existing property market in August and September (-19.4% year on year) then aggravated the decline in activity measured in the first 9 months of the year: -11.5% year on year.
In response to an exceptional deterioration in the market environment (tightening of lending conditions, increase in interest rates, loss of purchasing power, etc.), purchases of existing homes by private individuals will therefore decrease by 10, 0% (at least), to stabilize from 2023. But as economic, social and financial imbalances still risk deepening, the recession in the old real estate market is likely to be stronger than expected.
Further increase in margins in September
The increase in margins continues on an old market whose activity is in decline, with no real prospects of recovery. As of September 2022, it stood at 5.5% for the market as a whole, an increase of 43% in one year. Since the deterioration of the market is general, the margins for houses and apartments are growing at the same rate as the entire market for old properties.
Demand, which does not necessarily benefit from this development, is in fact penalized. Why candidates for purchase must negotiate more than before to arrive at a price that allows them to present a financing plan acceptable to the bank, while sellers, more constrained than in the past to resort to the transitional loan, must increasingly agree to reduce the prices requested to finalize transactions. But these price revisions are not yet synonymous with lower prices for the old ones: the ambitions of the new sellers remain intact in a market where there is scarcity and prices continue to rise. Prices posted in September were 6.0% above the level of a year ago.
As a result, margins have increased significantly in all regions, even in those where activity has recently been able to hold up better than elsewhere.
A faster decline in sales in the old sector in all regions
Purchases of existing homes by individuals declined rapidly during the summer. And for the first 9 months of the year, the decline was 11.5% yoy. The market situation has also worsened everywhere, in a further deteriorated economic and financial environment.
However, in two regions (Ile de France and Midi-Pyrenees), activity still managed to progress slightly, by 1-2% in one year. While in other regions the activity decreased by only 8%: in Alsace, Auvergne, Lorraine, Languedoc-Roussillon, Limousin, Nord-Pas de Calais and PACA.
Purchases, on the other hand, fell by more than 20% in one year, in regions where the difficulties in mobilizing personal contributions were more pronounced than elsewhere, when the bank offer collided with the profitability of particularly weak new loans or when the second market house (for example) is seized: in Lower Normandy, Burgundy, Champagne-Ardenne, Franche-Comté and Upper Normandy.
Elsewhere, the level of sales fell by about 15% in one year.
Price changes contained in the scarcity of bank loans
Although less rapid than at the beginning of the year, the rise in apartment prices continues in all metropolitan areas. The increase is the fastest in the metropolises of Aix-Marseille, Brest and Lille (at least + 7.5% in one year) where the imbalance between supply and demand persists and strengthens with the arrival of new customers, especially investors and professional relocations in search of opportunities: prices then rose quite sharply in the city center. Although slower, it is sustained (around 6%) in the metropolitan areas of Nancy, Paris or Rennes: in the metropolitan areas of Nancy and Rennes, increases are faster in central cities, peripheral municipalities no longer benefit as strongly as before. by the shift in demand, given the price levels practiced. They also express the scarcity of available properties in the center of a metropolis whose territorial attractiveness has only grown over the years. On the other hand, it is the lowest (less than 2%) in the metropolitan areas of Bordeaux, Nantes and Toulouse where, despite the situation of shortage due to the lack of supply, the price levels have excluded candidates to buy penalized by the tightening of the credit access.
By contrast, despite the rebound in house prices observed since summer 2021, price growth remains contained in the more measured metropolises. Prices also continue to drop slightly in several cities (Bordeaux, Lyon, Marseille, Paris and Rennes). The attractiveness of single-family homes is no longer as strong as before: the solvent demand capable of acquiring the properties offered has gradually run out, with dissuasive price levels, especially in a landscape in which the desired bank loans have become more difficult to obtain. ; in most of these metropolitan areas, prices are falling faster even in central cities, where their level has become prohibitive for a large percentage of potential buyers.
In all metropolitan areas, despite being characterized by a shortage of properties to be acquired, the solvent demand able to acquire these houses has merged with the scarcity of bank loans and personal contributions required.