Paris, April 24, 2020. (AFP / JOEL SAGET)
“What will regulate the real estate market in the next 30 years is demography and first-time buyers”, explained Charles Marinakis, president of Century 21 France, on BFM Business this Wednesday, May 11.
The youngest are less and less homeowners. Indeed, according to figures from the Century 21 real estate agency network, the proportion of people under 30 fell by 12% in the first quarter of 2022 on transactions. For Charles Marinakis, president of Century 21 France, “It’s a real concern”, he worried on the set of BFM Business this Wednesday, May 11.
“Unfortunately, in this age group, often they are first-time buyers. They are very affected by all the negative market factors. Prices have gone up, banks have an additional level of requirement – debt capacity is limited to 30%, personal contribution… Banks are starting to monitor other credit eligibility criteria : the energy strainers and the work that will have to be done to bring them into compliance, the multi-year work plans that will be voted on in the condominiums, but also the energy cost of travel between the place of life and the place of work.. .”, he listed.
“These are converging factors that penalize this population, who does not necessarily have a significant personal contribution, nor very large income brackets – they are often in a first job or a first permanent contract. This is indeed problematic because what will regulate the real estate market in the next 30 years, it’s demographics and first-time buyers,” continued Charles Marinakis.
2021, record year for old real estate
Still according to Century 21, according to figures published last January, 2021 was a “record” year for old real estate in France, but this risks to “eliminate the most modest people” of the market. The price per square meter has indeed continued to climb: in the third quarter, it reached nationally 2,355 euros for houses and 3,878 euros for apartments, according to INSEE and notaries. That is an increase of 7.4% for houses, and 5.3% for apartments.
The price increase is due to the tension in the market. After falling by 4% in 2020 under the effect of the pandemic, the number of transactions recovered quickly, thanks in particular to low borrowing rates. Some French people took advantage of this to buy bigger after confinements, while investors preferred to invest in stone, considered a safe investment in the midst of health uncertainty. According to notaries, the number of purchases of apartments and houses in 2021 should return to its record level of 2019, at around 1.7 million. But the number of old homes remains limited on the market.
The problem with this price hike according to Century 21 is that it “starts to desolventize the households with the lowest incomes and the youngest categories”. Young people or households with the lowest incomes “have no choice but to reduce the surface area or to buy further away” from the big cities, assured Laurent Vimont.
Logically, the personal contribution necessary to acquire a property has increased: according to Century 21, it amounted in the second half of 2021 to 32,153 euros on average for an average loan of 247,499 euros. In this context, “any rise in borrowing rates will erode the share of solvent households”, he added.
He also warned of the risk of seeing investors turn away from the market with the ban from 2025 on renting accommodation considered as “thermal sieves”, very energy-intensive. The share of acquisitions intended for rental investment was in 2021 at its highest for the fourth consecutive year, at 30.2%, up 2.7% compared to 2020.
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