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While prices have fallen 2% overall in Paris over the past year according to data from MeilleursAgents, credit conditions are tightening and affecting households’ ability to borrow to carry out their real estate projects. Let’s discover the evolution of the real estate scene in the Paris region since the beginning of the year and what the second half of 2022 has in store for us before focusing on some tips if you want to get a property in Paris or in the Paris region.
Real estate in Paris and Ile-de-France: review of the first half of 2022
For nearly a year, real estate prices in the French capital have deviated from those of other major cities in France. While prices rose more than 6% in Marseille, for example, prices fell by 2% in Paris over the same period. The average price per square meter in Paris even approached the symbolic bar of €10,000 in May 2022.
With the exception of Hauts-de-Seine (92), where the development of the real estate market has witnessed a decline of 1.4% over one year, the other regions of Ile-de-France are experiencing a certain dynamism. Val-d’Oise (95) recorded the highest price increase of 6.3%, followed by Seine-et-Marne (77) + 4.9%, Eason (91) + 3.8%, and Seine-Saint-Denis (93). + 2.7%.
Although demand is generally outstripping supply and prices have fallen in some popular cities, credit activity has slowed since the start of 2022.
The conflict in Ukraine led to many uncertainties in the economy and had a strong impact on the prices of energy and agricultural raw materials, pushing inflation to new record levels. Tensions in the bond market and the prospect of higher key interest rates by central banks also supported higher borrowing rates, causing some households to slow down in carrying out their property purchases.
According to L’Observatoire Crédit Logement/CSA, loan production fell 5.6% in France in the first half of 2022 year on year, and the number of loans granted fell 7.3% over the same period.
Prospects for the real estate sector in the Paris region for the second half of 2022
Prices should continue to rise in Ile-de-France, particularly thanks to the Grand Paris Express project that should transform the dynamism of Ile-de-France by connecting the region to Paris. On the other hand, the opposite situation should be noted in Paris while a part of the population is trying to move away from the capital for larger roofs and/or a garden.
The change in the ECB’s rhetoric regarding rate hikes to combat accelerating inflation should also support higher borrowing rates.
Uncertainty about the economic context in France, but also internationally, as well as the loss of purchasing power of French households, should raise prices in this second part of 2022, which should continue to slow the pace of buying by households who need to borrow to buy.
For François Villeroy de Gallo, governor of the Bank of France, rates could reach 3% by the end of the year.
Tips for a potential purchase in Paris or Ile-de-France
Lower prices in Paris may prompt some buyers to benefit now, while others may want to wait until the drop becomes larger. Il est aussi possible que certains veuillent acheter aujourd’hui en Île-de-France avant que les prix ne montent trop haut pour éviter d’acheter au plus haut, alors que d’autres pourraient vouloir attendrex de nobais ques kicks off…
Remember, however, that real estate prices take time to adjust to the decline. Although there are many uncertainties about the economic context, you should also know that buying real estate now if you have a concrete project may allow you to secure greater borrowing capacity than in the future due to higher interest rate and tightening credit conditions.
To save time and benefit from the best loan terms for your project, feel free to use the services of a real estate broker.
If you want to apply for a loan yourself, it is important that you do it in at least three different banking institutions to be able to compare offers in the market. Always remember to play the competition!
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