In a changing real estate market, staying informed to make the right decisions is important.
Here are some keys to understanding and taking action.
How does the real estate market work?
Like many investment markets, real estate follows a cycle.
After years of sometimes robust growth, it is currently experiencing a period of decline, affecting major cities such as Paris (-4.5%), Bordeaux (-8.6%), Lyon (-8.1%), and others, impacting about 50% of French cities.
It's a natural cycle.
When the market declines, it means that it is narrowing around real estate sales related to unavoidable events, the "5 Ds": Moving, Death, Divorce, Descendants, and Debts.
Currently, sales related to an improvement in the quality of life tend to be delayed.
Why is the real estate market declining?
It is estimated that 70 to 80% of property buyers rely on credit.
Since 2022, borrowing conditions have tightened with higher interest rates and stricter access conditions.
For example, for a monthly payment of €1000 (excluding insurance) over 20 years, the borrowing capacity has dropped from €217,500 for a 1% interest rate in 2021 to €162,000 for a 4.19% interest rate in 2024, a decrease of €55,500 in borrowing capacity.
First-time buyers are the most affected by this tightening of borrowing conditions.
Some buyers, especially first-time buyers, postpone or cancel their purchases.
Buyers who rely on loans must adjust their plans, sometimes for smaller or more distant properties.
Since the sales market is stagnant, clients are turning to rentals, which are becoming increasingly competitive in some cities.
Will prices in 2024 adjust to the rising interest rates?
The answer varies greatly depending on the location, the quality of the property, and the need for the owner to sell quickly.
Some cities still experience price increases, such as Toulon or...
Attractive properties generally remain stable.
However, properties with defects and energy inefficiencies are selling slowly and are heavily negotiated.
Overall, experts predict an average decrease of 4%, which will not offset the rise in interest rates.
Because the current crisis is not related to a speculative bubble or an oversupply of properties; on the contrary, in the long term, due to population growth, demand will continue to increase.
So, should you buy or sell in 2024?
In a declining market context, there is always a period where the market freezes while waiting for a supply and demand adjustment. This is the case currently.
In these periods, it is important to look at the market in the long term to avoid getting locked into purely financial decisions, as real estate is much more than an investment: it is a living environment that must adapt to individual needs.
The right time to buy?
From our investor's point of view, we have entered a very favorable period for buying:
The current market offers the combined advantage of a more abundant supply of properties and longer sales times, allowing for a thorough refinement of a real estate project.
Moreover, the number of loans granted is increasing, and interest rates are stabilizing, which means more favorable borrowing conditions.
So, it is a good time to buy, taking the time to assess the potential of the property and negotiate a fair price.
The right time to sell?
It is never easy to decide to sell in a declining market, but postponing is sometimes impossible, and betting on a better price within 18 months can be risky.
Our recommendation: if you need to sell in the next 18 months,
Don't wait to put it on the market, as sales times have lengthened, and you should avoid being under time pressure.
Adopt a realistic sales price strategy, comparable to other properties for sale.
Highlight your property by ensuring it is well-maintained, and consider interior improvements or home staging, as well as careful maintenance of outdoor spaces. This can make a difference.
Finally, if you are selling to buy a larger property, know that the market could work in your favor, as you could lose in the sale but gain in the purchase.
The importance in a changing real estate market is to move forward with clarity and realism. Make informed decisions that take into account all criteria (financial, family, professional), act with foresight to free yourself from time pressure, and always consider the long-term perspective.
Do you have questions about your real estate project?
Contact us at Un Palmier Dans La Cour. We are here to help you, think with you about the best strategy, and, if necessary, provide a free estimate."