Real Estate 2023: discover results and projections – Pretto

Christmas is coming, time to take stock, take it easy. As 2023 was not an easy year for real estate loans, we look back at the main episodes that marked the year. With some projections for 2024 as a bonus – that’s a giveaway.

Rates that went up, went up

Go higher, go higher” is the refrain that punctuated 2023. If rising rates started in the summer of 2022, has continued its rise in recent months. Between January and December, rates rose sharply, from 2.59% to 4.34% on average for loans over 20 years.
A direct consequence in the real estate loan market: profiles that were previously able to borrow saw their loan applications rejected. As for those who can still borrow, they saw their purchasing power dissipate.

Using the above 20-year rates, a French person earning a net monthly income before tax of €3,500 could borrow €229,273 in January 2023. In December, their borrowing capacity increased to 196,300 euros, i.e. down 14%directly related to rising rates.

And not only for individuals, taking out a loan has become more expensive. Banks also saw margins shrink. As a result, they tightened lending conditions and began to lend less, resulting in a drop in loan production (real estate loan production fell by more than 40% in the year to the end of October 2023). In short, 2023 will be a complicated year for the credit market.

The authorities are significantly behind schedule

Advanced measures includerelease of PTZ access conditions (which should concern another 6 million French people), a subsidized loan with unclear outlines and a simplified sale of vacant apartments. Their specific impact on credit utilization still needs to be studied. To be continued.
Stay a measure decided upon by the government this year (on the recommendation of the Banque de France) which proved to be really effective : monthly installment of wear rate (quarterly until then) from February to December, which allowed banks to return to real estate lending by giving them more room to set rates.

HCSF directly in the shoes

Little known to the general public, the Council for High Financial Stability fulfills the role of an arbitrator on the real estate market. This means that his decisions have an immediate impact on borrowers.

And this year, despite strong calls from market participants demanding the simplification of credit access conditions, HCSF stood out for its rigidity. No increase in the debt ceiling, which is still set at, say, 35%. The Supreme Council only conceded changes at the edges. Latest technical changes announced will give banks a bit more flexibility to deviate from the criteria and will benefit those using a bridging loan or looking to carry out work in an old but should not radically unblock the market.

Will HCSF shift gears in 2024? Bets are open.

On the Pretto side, what do we suggest?

This year, Pretto called for specific measures to benefit future buyers. Between them, adapt HCSF standards for highly energy efficient goods or acquisition projects including energy renovation works.

In short, enable buyersborrow more to finance energy renovation work, adding an additional exemption to the 35% debt. This would save around 30% on the energy bill, freeing up 3 points of disposable income for the most modest households. A real plus for remains alive !

2023, a buyer’s market

The big coup of 2023 is a shift from a seller’s market to a buyer’s market. The periods of low rates we’ve experienced in the past have actually boosted house prices – borrowing wasn’t really a problem with rates below 1%.

As the cost of credit has risen, many sellers find themselves in the real estate market without finding a buyer. And who says that more available goods and less demand says price drop. This is how we could observe first declines, especially in large French cities. The best symbol: the price per square meter fell below 10,000 euros in Paris.

Across mainland France, the observed decline in sales prices is 2% for apartments (1.6% for houses). In the third quarter, prices even fell by 5.3% in Île-de-France, according to data from the Supreme Council of Notaries. AND the trend should increase in 2024.

Result : time to negotiate. Now is the time to put your arguments together and lower the selling price to regain some buying power.

Becoming a professional negotiator can be learned

At Pretto, we are committed to providing you with the tools to successfully complete your property purchase project. That’s why we’re mobilizing to provide you with plenty of advice on how to learn how to negotiate well. It will pass our itemsbut also through a video masterclass to share advice from real professionals.

And what to expect in 2024 on the real estate market?

It’s time to plan ahead (and still believe in the future ¹). What does 2024 have in store for us in terms of real estate loans?

Although many parameters remain constant, there are things that a market specialist knows through analysis. So we can announce it the rate hike is finally behind us. We’re not saying that no bank won’t revise their rates upwards from time to time, as they have every right to do, but the general fever outbreak we experienced in 2022 and 2023 is over. The best evidence: banks are lending again and some have even started lowering their rates For certain profiles.

In 2024, natural competition between banking organizations should accentuate this movement rates could drop significantly from mid-year. Great news for anyone looking to buy in the coming months (and for those who are buying right now and will be able to renegotiate the price)!

From looking for real estate to getting a loan

Be prepared for your first real estate purchase. All our advice is collected in a free ebook!

Finally, the beginning of 2024 will be more than ever devoted to negotiations. Now is the time to try lower offers. But beware, don’t wait too long as the fall in property prices could stop once rates come down. Now is the time to have good deals!

With that, it’s time to wish you a great end to 2023. See you in 2024 for even more analysis and deciphering of the real estate market.

Free time during the holidays? Our articles are here to guide you between two chocolate truffles. On the program 100% Christmas selection:

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