5 signs that the real estate market is (scarefully) recovering

Buyers visit agencies, visit properties, and transactions are starting to increase slightly again. A slow recovery, which could accelerate with a possible drop in interest rates from the ECB.

We see the beginning of a light at the end of the tunnel. The real estate market is still performing poorly, and sales continue to decline (down 11.2% year-on-year in the first quarter at Century21 and even by 19% at Orpi). But they are retreating fewer and faster.

The agencies are seeing signs of the beginning of a recovery due to slightly less expensive credit. An overview of the clues that suggest the real estate market is slowly turning into color.

1. Sales increase slightly

Recently, according to Guillaume Martinaud, president of Orpi, there has been an earthquake in the real estate market.

“January and February were extremely difficult. March is much happier, we have data starting to come back, morale is returning,” he announced at a press conference.

Laforet also noted that compared to the last quarter of 2023, the number of transactions increased by 0.5%, driven in particular by Île-de-France and especially Paris where prices have been at long-term lows.

2. Buyers come back and view properties

Buyers are once again knocking on the doors of agencies. According to Century 21, the steps to buy property are continuously increasing. The company particularly notes the increase in requests for information in agencies and consultations of online advertisements.

“We’re going from red to orange,” Century 21 boss Charles Marinakis said succinctly.

In terms of trips, the increase is even more pronounced. Chairman of Century 21, Guest of BFM BusinessNotes the return of buyers with a 10 to 30% increase in visits depending on the region.

3. Prices have adjusted

These market shocks ultimately appear to be the result of falling prices. The boss of Century 21 estimates they have declined 12 to 15% since the beginning of the real estate crisis.

In Q1 2024, Orpi projects a 3% year-on-year decline in per square meter prices across the country. For Laforet, the decline is 4.7%, and according to Century 21, it is 3.2% for apartments and 3.3% for houses.

With these value alignments, Charles Marinakis says he is “excited for the months ahead”. Yet he is angry: “It will not happen at the end of April” but “in the second half of the year.”

However, significant disparities are observed by region in the 21st century. Thus in the Pays de la Loire prices fell by 12.1%, while in Provence-Alpes-Côte d’Azur they rose by 4.4% with a series of intermediate positions. In the larger coastal cities, which are still very popular, the market continues to climb.

This drop in prices is good news as it may make the market more liquid by encouraging buying. However, some buyers are still waiting for a steeper cut, or more affordable lending rates.

4. Credit rates have gone down

Although they are still high, near 4%, credit rates have begun to decline, and faster than expected,

“This is an alignment of the planets that is turning positive again, first and foremost the decline in rates – we will be at 3.84-3.98% (in 20 years, editor’s note) –, the prices that have fallen and the inflation that has Below is the control”, explains Charles Marinakis.

“On average, it is currently possible to borrow at 3.7% over 15 years, 3.9% over 20 years and 4.1% over 25 years, but the lowest negotiated rates can reach 3.5% over 15 years, 3.6% over 20 years and 3.9% 25 years”, details broker Vousfinancer in a press release.

Rates could fall further within a few months, with the ECB likely to cut key rates due to inflation control in the euro zone, which should take place on June 6.

Real estate rates over 20 years could reach 3.2% at the end of the year, resulting in a further increase in the purchasing power of households. But experts agree that we will not return to the very low rates before the crisis.

5. Banks are a little more flexible

Even if 1% rates appear to be well and truly over, some good news reached buyers’ ears this week. Eurozone Bank Has relaxed its conditions for giving real estate loans In the first quarter, for the first time in three years.

“For the first time since the fourth quarter of 2021, banks reported a modest relaxation of their criteria for lending for housing purchases,” the ECB said in a report published on Tuesday.

According to this study, the net percentage of banks that have relaxed their norms is 6%, while in the last quarter of 2023, banks had relaxed their norms by 2%. “Improved risk tolerance among banks contributed to this easing,” the ECB estimates.

Despite these encouraging signs, the situation remains uneven depending on the region. The new and rental markets are still struggling. moreover, Sales time continues to increaseAn average of 109 days a year to sell a house, and 100 days for an apartment, again according to Century 21.

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