Property: The Price Decline is Probably Behind Us

Finance Property
More buyers are entering the property market
More buyers are entering the property market
In Bordeaux, the prices have been rising since the beginning of the year. (c) Association Pierre de Bourgogne

Increasingly numerous Buyers, spectacular rebound in production credits … All lights are green for a few weeks. A prelude to higher prices?

The real estate market recovery, which began last spring, is confirmed month after month. Buyers are back on the market and the rates continue to rise. Meanwhile the price? According to the latest data from the Observatoire Crédit Logement / CSA published this Thursday, September 3, the rate mortgages averaged 2.17% in August, against 2.06% in July and 2.01% in June. So, yes, summer is often conducive to a glut. Everyone is looking to find accommodation before school starts and loan applications invade the offices of bankers. This is an opportunity for them to adjust their schedules, especially when they have already paid a lot of money. Moreover, at the end of June, banks had already achieved almost 70% of their credits production targets, according to the site

However, the current movement can not be summarized in a simple summer overheating.  Excluding loan repurchase, from June to August, production loans (total amount of loans) rose by 65.3% compared to the previous three months.  A dramatic increase.  In the last twelve months, loan production is also supported: + 32.8% compared to the period from September 2013 to August 2014. “Such high rates of progress had already been noted in the past, whenever recovery of real estate markets; and more recently in 2010 and 2013, at the same time of year, “said the observatory Crédit Logement / CSA.

Loan durations lengthen

Another sign does not lie: the lengthening of loan durations.  Buyers are indebted in August of 216 months on average, a level not seen since 2011. And since the beginning of the year, financial institutions to start lending over longer periods.  Loans 20 to 25 years accounted for 34.1% in the second quarter of production credits and loans 25 to 30 years 18.3% of production, against respectively 30.9% and 15.1% of production in 2014.  This, logically, indicates a return of first-time buyers and young families, the most likely to obtain such conditions.

In its re-entry conference, also held this Thursday, the site also found a quiver demand. His estate voltage indicator (ITI), which measures the balance of power between buyers and sellers, dates. A first since 2011. Buyers are still few compared to vendors but it is less and less the case. The ITI has increased from 1 to 1.3 between January and September in Paris, from 1.1 to 1.4 in Lyon, from 1 to 1.7 to Nantes or from 0.6 to 0.7 to Marseille.  To recall, according when ITI is less than 2, there is a lack of buyers and the prices tend to fall. When it is between 2 and 3, the supply and demand are balanced. When it exceeds 3, there is an excess of buyers and prices start to flare.  This indicator launched in 2014, should be taken with a grain of salt. However, it has the merit to exist and its interpretation begins to narrow.

The branch networks,are now smiling again. “In the first half, we recorded 15.5% of activity in our branches,” says Laurent Vimont, CEO of Century 21, the 2 nd sector. The leader appears Orpi meanwhile with sales up 4.5% over the same period.  And Guy Hiccups is + 9.4%.  To believe, “the French real estate market between so gradually into a new bull market.”  A change that could be spread over a long period and which “does not cover the whole of France before 12 (hotspots) to 18 months (rural areas). ” Only the capital could make exception in the coming months.  The still very high prices seem to have definitively vaccinated young buyers.  In addition, the rent regulation scares away investors who could see heavily on the small crown.  Finally, between the Russian embargo, the gloom of Italy, the crisis in China and Brazil, and a barrel of oil plummeting, foreign demand is not expected to compensate for this movement.

Already province of price increases

Outside Paris, increases are expected in some major cities.  Real estate agents are already seeing price increases in Toulouse (+ 0.7% since January), Bordeaux (+ 0.9%) and Nantes (+ 2.9%), according to data collected by  Will it fall after the summer?  That is the question facing all professionals. The individual must be cautious.  A sharp slowdown in growth, a boom rates or disincentives policy measures can break in a few weeks this recovery.  In a summer release study,economist Pierre Sabatier Primeview the same firm estimated that prices should fall further 30% in 5-10 years.  What for ?  Because of the aging of the population after 60 years, and on average the French sell more goods they buy.

But this long-term trend, which should continue until 2035 before a return to balance between buyers and sellers, does not preclude temporary reversals.  It also assumes that the urge to buy is not related at this rational criterion of supply and demand.  However, when comparing the debts that the population is willing to contract to become owner in Europe, there are huge differences between countries.  Without this having always linked to disposable income or the rate of owners.  The Danes, for exampleare likely to be four times more in debt than the French household owner.  Ultimately, it is the vision that the buyers of the property which will make the market in the months and years to come. And this summer, the urge to buy is back.

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