Falling real estate transactions and prices: what does it mean?

Real estate transactions are on the decline and the July Real Estate Conjoncture report from notaries confirms this. So what is the advice of notaries? Should we follow them? We will enlighten you on all these nuances so that you can stay calm.

-1% on the sales price index… right now

But what is the role of a notary? It is essential in real estate transactions. They guarantee the authenticity of actions and ensure that everything is done legally. Real privileged witnesses of what is happening in the market, they inform us about real estate developments thanks to their experience and know-how.

As we all know, the real estate market is in crisis and the notaries confirm this to us in their latest real estate situation note posted on July 26, 2023: house prices have fallen by -1% since last summer. Ok, not the crash of the century. In fact, it is a downward trend in prices that is starting. And overall, it is “accelerating” from the beginning of the first quarter of 2023.

In fact, between the end of 2022 and the beginning of this year, old housing prices fell between -0.2% and -1.1%, both in Île-de-France and in the provinces. A downturn that, if deepened, could unblock the real estate market a bit. But we also put ourselves in the shoes of the owners, it’s hard to see your property lose value…

Development of the price index between the first quarter of 2022 and the first quarter of 2023 (source: Real Estate Situation Note No. 60)

old housing old apartments old houses
Metropolitan France 2.7% 2.1% 3.1%
Ile-de-France -0.6% -1.2% 0.9%
Province 3.9% 4.7% 3.5%

Development of the price index between the fourth quarter of 2022 and the first quarter of 2023 (source: Real Estate Situation Note No. 60)

old housing old apartments old houses
Metropolitan France -0.2% -0.1%% -0.2%
Ile-de-France -1.1% -1.1% -1%
Province 0.1% 0.6% -0.1%

Sell ​​before buying? Council of notaries

Notaries are unanimous: you must sell your property without further delay. In any case, it is recommended by the notaries interviewed in a study carried out by the notary real estate portal Immonot.com. “*As the market has been continuously bearish for over a year, most of the advice is sell oriented.” Maître Ody, notary at La Guerche de Bretagne.

Ok, but is this really the right option? (Yes, we’re the doubting type too).

Because if the transaction decreases, it means less work and less income for the notary. A small reminder: notary fees vary between 3 and 8% of the property price, including 80% taxes and 10% fees.

So it is clear that notaries are very interested in recommending you a sale! Are we listening to them? We would like to scream foul and contradict the majority, but no: the notaries are actually right here. It’s better to sell.

Notaries, as well as brokers and other market participants, are calling for the revival of the sector. A recovery that includes a drop in commodity prices (among other things).

Falling commodity prices: what impact does it have on sellers and buyers?

To recap: inflation and rising interest rates created the housing crisis. Since the beginning of 2023, the entire real estate market has faced this crisis.

  • Buyers can borrow less money (so their purchasing power decreases)
  • The owners are unable to sell at the asking price
  • The number of transactions is decreasing.

Unfortunately, these are natural cycles in reality (a bit like the seasons and aperitifs on the patio that follow raclette by the fire). The most important thing to consider is your personal situation!

• Lateral sellers : if you want to get added value on the sale price, you have to be careful. The value of your property will likely need to be revised downwards, the key is not to lose too much money. Advice: if you reduce the price of your property quickly now, you won’t have to reduce it much in the future. Because we prefer reality: buyers will not find more money tomorrow.
• Lateral buyer : if you are convinced of your place of residence for the next decade, you can buy. Especially if you are still a renter, think about inflation, which only increases the rent (while the monthly loan payment does not change). On the other hand, if you want to start a rental investment, we recommend starting the process with caution and ensure the profitability of your upstream purchase (property price, monthly payment amount and estimated rent received). Real estate really depends on the personal situation.

Owners and buyers alike, we understand your frustration. The real estate market boomed after covid, so we had to expect the downturn to come back. But clearings are slowly being created.

Despite the lower purchasing power, we maintain the trade margin, which works slowly with the drop in the price of goods. Let’s also consider ourselves lucky to be able to borrow again (unlike at the beginning of the year).

So to mitigate the effects of the crisis, let’s agree to show resilience! We breathe the sea air, we drink another glass (of water) and our dear owner friends use the holidays to ask themselves the right questions: on a scale of 1 to 10, to what extent do you want to sell your property? If your answer is above 6, it may be time to be less greedy with your selling price.

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