Mortgage rates should continue to rise in 2024 to meet the new, increasingly stringent financing conditions. First-time buyers will also face challenges, as they will have to wait an average of 12 years before they can earn a profit on their real estate investment. The reduction in real estate transactions is likely to persist, as is the downward trend in prices. Rental offers should also remain stable. Ongoing regulations, such as the rent control law, will also have an influence on the real estate market in 2024.
Analysis of current trends
Financing conditions are becoming increasingly stringent, and this is having a considerable impact on the French property market. The sudden rise in interest rates and the sharp drop in credit production since the start of 2022 have forced players in the real estate sector to adapt quickly to new financing requirements. As a result, real estate transactions have fallen by 20% compared to 2022, i.e. less than one million sales in one year. Prices have also fallen by 0. 4% nationally over the last twelve months, with a downward trend observed in more than half of the country’s cities.
The situation is all the more complex as tension in the rental market increases. This suggests that, while real demand for real estate is likely to remain limited, it will mainly be confined to second-time buyers. As a result, the number of properties available for sale should continue to grow, while the number of apartments available for rent will remain fairly stable. As a result, the current crisis is having a significant impact on all segments of the real estate market, including rural areas.
The current economic situation is not conducive to first-time buyers looking to purchase their first home. In fact, a study by Meilleurs Agents shows that, although 90% of these aspiring homeowners have the financial resources to buy a 50 m² apartment, they will have to wait around twelve years for the purchase to pay off. The current real estate market is such that the decision to buy a property in 2023 should only be made with a long-term investment in mind, which may prove prohibitive for many first-time buyers.
The current real estate crisis also looks set to continue, with a decline in real estate transactions forecast for the coming year. Prices are also likely to continue falling, perhaps reaching a 5.5% drop in October 2023. Rental offers are likely to stagnate during this period. To take advantage of this situation, we recommend that you: compare mortgage offers to find the best deal, optimize your finances and try to negotiate with your bank.
Forecasts for the coming year
The experts agree that the outlook for the coming year is rather gloomy for the French real estate market. Current trends will continue, with a decline in transactions and prices. Rental pressures will only worsen, while first-time buyers will continue to find it difficult to access the property market. Rental offers should stagnate, while the market for second-time buyers will be more flexible and bank lending criteria more flexible.
Real estate transactions in France have already begun to decline, with a 20% drop compared to 2022. Prices have also fallen by 0.4% over the past twelve months, and this trend is set to continue. First-time buyers must be prepared to wait an average of 12 years before the purchase becomes profitable and builds up assets equivalent to those they would have accumulated had they remained tenants. This period has increased eightfold in the space of just two years. What’s more, buying a property in 2023 seems to be a viable option only if you can immediately invest in a property designed for the long term, while the possibility ofbuying a 120 m² apartment is reserved for second-time buyers.
The stagnation in rental offers is reflected in the difficulties encountered by young people looking to leave the family home or live in a shared apartment. Rental accommodation is scarce and the market is saturated, leading to rising prices.
The recent provisions of the rent control law, the energy renovation tax credit (CITE), and the APL reform will also have a significant impact on the real estate market. New regulations designed to help low-income households access home ownership will not be enough to solve the long-term problems affecting the French real estate market.
These forecasts are largely influenced by economic factors. ECB rates, government lending rates and competition between banks have a direct impact on mortgage rates. The bond market is also an important factor to watch.
How can I get the best mortgage rate? First of all, it’s crucial to compare the offers made by several banks and choose the one that offers the best rate with the best conditions. Next, you need to optimize your finances, in particular by paying off your debts before taking out a mortgage. Finally, it is advisable to negotiate with your bank to obtain more advantageous conditions.
All in all, the coming year will be a difficult one for the French real estate market. Current trends will be reinforced, and the difficulties encountered by first-time buyers and tenants will persist. It’s crucial to pay attention to the economic factors that influence mortgage rates, and to compare offers to get the best possible rate.
Current regulations are also having a significant impact on the French real estate market. The Rent Control Act aims to regulate rental prices in areas of high demand. It is designed to protect tenants by limiting landlords’ ability to raise rents to excessive levels.
The Energy Renovation Tax Credit (Crédit d’impôt pour la rénovation énergétique – CITE) is a tax reduction granted to individuals for work to improve the energy efficiency of their main residence. This tax reduction can help homeowners finance energy renovation work on their property.
The APL Reform is a reform designed to reduce the cost of housing allowances to the State. This reform involves changes to the APL calculation formula, which will reduce the amounts households can obtain.
These regulations can have an impact on real estate investment and demand for mortgages. Investors should be aware of the risks and benefits associated with these regulations.
Factors affecting mortgage rates
Mortgage rates are influenced by several factors, including the European Central Bank (ECB) rate, bond market rates, government borrowing rates and competition between banks. The ECB rate is considered to be the main factor influencing mortgage rates. If the ECB raises interest rates, banks will have more incentive to raise their mortgage rates. Bond market rates also have an impact on mortgage rates, as banks often use the bond markets to finance their home loans. Government borrowing rates can also play an important role, as banks can adjust their home loan rates according to government borrowing rates. Finally, competition between banks can also influence mortgage rates, as competitive banks will be more inclined to offer attractive rates to attract customers.
How to get the best mortgage rate
Comparing offers, optimizing your finances and negotiating with your bank are the keys to obtaining the best mortgage rate. Start by making a comparative study of the different offers proposed by the banks. Analyze the different features of each offer, such as application fees, overall cost of credit, borrower’s insurance, etc. Then prepare your loan application by optimizing your borrowing profile and reducing your debt ratio. Finally, negotiate with your bank to obtain the best rate conditions. Don’t hesitate to make an appointment with several banks so you can take advantage of the competition. Banks know that potential customers can be hard to get in these times of real estate crisis, so don’t hesitate to be firm in your negotiations.
In conclusion, experts have a cautious outlook for the real estate market in 2024. With fewer transactions and falling prices, first-time buyers are facing increasing problems. Increasingly stringent financing conditions and the current tight rental market are having a major impact on the real estate market. Current regulations, such as the rent control law, the energy renovation tax credit (CITE) and the APL reform, could affect mortgage rates. To get the best rate, it’s important to compare offers, optimize your finances and negotiate with your bank.
William Vallet est le fondateur de TIH-Business, spécialisé dans tous les sujets liés aux affaires. Il est un entrepreneur à succès depuis plus de 10 ans et a créé plusieurs entreprises dans différents domaines. Sa dernière entreprise est le magazine TIH-Business qu’il a fondé avec l’idée d’être une publication indépendante qui fournirait des informations sur les affaires et l’entreprenariat pour aider les gens à créer leur propre entreprise.