How has real estate purchasing power changed in recent years? Between the rise in interest rates then their decline, the surge in prices then their fall, it’s difficult to see clearly… We take stock of what was really lost but also regained.
Based on FNAIM data and calculations by the broker Vousfinancer, if we compare today’s market to that of 2021, when interest rates oscillated around 1%, all major cities in France without exception suffered heavy losses.
Less living space
Thus, with equivalent monthly payments, an owner has lost around twenty m² in Marseille, Nice, Montpellier, Strasbourg, Reims, Toulon or Le Havre in the space of 3 years. Even more spectacular in Saint-Etienne, for a monthly loan payment of €1,000, it is currently possible to buy a 118m² apartment, or 44m² less than 3 years ago!
Finally, the cities where the losses are the most limited are the most expensive cities and where prices have fallen significantly in recent years, like Paris and Lyon which have lost the equivalent “only” of a small bathroom.
Interest rates starting to decrease
Conversely, real estate purchasing power can take pride in the relaxations on credit in recent months and the price reductions which are beginning to have their effects.
In many cities, the fall in prices has accelerated significantly. At the same time, interest rates began to seriously fall. We thus went from 4.10% interest over 20 years in January to 3.8% today.
Result: none of the major cities in France have lost real estate purchasing power since the start of the year. We are at worst stagnant in Nice, Strasbourg and Saint-Etienne because prices here continue to increase. In all other cities, we gained a small handful of m², not much but the equivalent of an extra bathroom in the space of a few months.
Note that in the cities where prices have fallen the most, the change over 1 year, even though rates were higher than today, is also favorable to borrowers. This is the case in Paris, Lyon, Toulouse, Nantes, Montpellier, Bordeaux and Rennes.
Is this really the end of the loss of our real estate purchasing power?
On interest rates, there is a certain consensus. We expect the decline to continue this year and an average of 3.2% over 20 years in December. However, uncertainty weighs much more on the direction of prices.
The broker Vousfinancer therefore started with two possible scenarios. Good news: whatever happens, whether prices fall further or start to rise slightly, we will continue to regain m² thanks to the correction of interest rates! So obviously the “rate and price drop” scenario remains the most favorable, with a drop of only 2% in prices, we would thus find at the end of the year, a real estate purchasing power equivalent to that of 2022…
