LReal estate professionals have regained confidence with the drop in mortgage rates observed since the beginning of the year. Even if they will not return to the historically low levels they reached in the early 2020s any time soon, the falling rates are giving back some purchasing power to those who want to buy a home.
However, the observed easing does not erase the sharp rise since 2022. And the decrease in prices, noted in certain areas, does not compensate for the increase in the cost of money since the – abnormal – period when it was possible to borrow over twenty years at… 0.5%. As a result, the real estate market has seized up. The number of transactions is expected to contract by more than a third in 2024, compared to the record of 2021.
Sellers do not want to give up the prices they could have hoped for two years ago, especially when they have taken out a mortgage at rates significantly lower than those available today. Buyers, for their part, hope that the generally modest decline in prices will continue, which will allow them to finance their dream property at current conditions.
Modest discounts
According to professionals (real estate agents, mortgage brokers, notaries, etc.), this period is ending. With the drop in rates that will continue in the coming months, buyers have found their way back to real estate agencies, and sellers are ready to grant discounts – often modest – to sell their property, especially when they are forced to do so. The slight rise in prices observed here and there would indicate the end of the crisis that the sector has experienced in recent quarters.
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Will this movement continue in the coming months? “We do not see any signs of recovery in the real estate market in the immediate future”says Boris Intini, CEO of PraxiFinance, a firm that monetizes real estate through various solutions. Other experts are more optimistic. On the rate side, the easing will continue. However, the announcement on September 12 of the easing of the monetary policy of the European Central Bank, by Christine Lagarde, president of the monetary institution, did not give a precise indication of the pace of the decreases to be expected by the end of the year, and we will probably have to wait until December for a new movement. On the price side, demand is there, but supply a little less, which argues for the end of the decline. However, other parameters must be taken into account.
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