Between the rise in interest rates then their decline, the surge in prices then their fall, it is difficult to see clearly about our real estate purchasing power. Data collected exclusively for BFM Business gives us the measure of what we have lost, but also regained.
How did it actually evolve? our real estate purchasing power? Thanks to data from Fnaim and calculations from the broker Vousfinancer, we will be able to quantify this evolution. So obviously if we compare today’s market to that of 2021, when interest rates oscillated around 1%, all major cities in France without exception suffered significant losses.
So with equivalent monthly payments (1,000 euros per month for a 20-year loan), we lost around twenty square meters in Marseille, Nice, Montpellier, Strasbourg, Reims, Toulon and Le Havre in 3 years. Even more spectacular Saint-Etienne: for 1,000 euros of monthly loan payment, we lost 44 m² in 3 years. 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 where we “only” lost the equivalent of a small bathroom.
Review of recent months
Losses of purchasing power over 3 years but in recent months, good surprises thanks to price and rate reductions. Because in many cities, the price correction has clearly accelerated and at the same time interest rates have started to fall.
We thus went from 4.10% over 20 years in January to 3.8% today. As a result, none of the major cities in France have lost real estate purchasing power since the start of the year, except Strasbourg (-0.4%). We are at worst stagnant in Nice and Saint-Etienne because prices here continue to increase. In all other cities, we gained a small handful of square meters, 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 one year is also favorable to borrowers. This is the case in Paris, Lyon, Toulouse, Nantes, Montpellier, Bordeaux and Rennes.
But what will happen tomorrow? Is this really the end of the loss of our real estate purchasing power? There is a certain consensus on interest rates. 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.
And the good news is that whether prices fall further or start to rise slightly again, we will continue to regain square meters thanks to the correction of interest rates. So obviously the “rate and price reduction” scenario remains the most favorable. A drop of just 2% in prices would allow us to regain our 2022 real estate purchasing power at the end of the year.