Homebuying candidates can relax a little. Mortgage rates have been declining since the beginning of the year. And although this movement appears to have stalled in recent weeks, it is expected to continue when the European Central Bank lowers key rates in June, as it has suggested. The intermediary Pretto has calculated that the drop in mortgage rates has already restored purchasing power to those looking for a property.
After falling to 192,338 euros at the end of 2023, the borrowing capacity for a gross monthly salary of 4,000 euros stood at 200,819 euros at the end of March. However, at the beginning of 2022 there were 276,790, so the gain remains modest. To fully restore borrowers’ purchasing power, real estate prices would have to fall by… more than 25%, if we rely on Pretto’s estimates.
We are far from this: according to MeilleursAgents, in the ten largest French cities they fell by only 3.1% in 2023. And the most recent studies show a stabilization of prices rather than an acceleration of the decline. Under these conditions, can we expect a lasting recovery of the real estate market?
There are many factors that explain the level of real estate prices. Above all the lack of supply, which in some regions is cruelly felt. Even the current owners are not willing to accept giving up the proceeds of the sale that they could have hoped for just a few months ago.
They have even less incentive to sell if they have taken out loans over the past decade to complete the acquisition. Now the credits are more expensive to finance the next one.
Industry professionals, real estate agents or brokers want to believe that things will gradually return to normal. However, it seems illusory to count on a strong market recovery without a further drop in prices. It is true that, apart from purchase candidates, few people have an objective interest in it. Landlords wouldn’t necessarily find what they’re looking for, nor would real estate agents and developers. Nor, moreover, local authorities and the State, which derive part of their revenues from the operations carried out.