That's it, it's being talked about everywhere: interest rates are starting to ease slightly (some will say "finally!"). Good news for all those considering buying new real estate or new homes. But will this simple boost in credit be enough to revive a still recovering market? Let's try to take stock, occasionally looking at things from a different angle.
Mortgage rates largely depend on the monetary policy of the European Central Bank (ECB). After several successive hikes – to contain inflation – the ECB seems to be taking a pause... which directly affects the cost of borrowing. In concrete terms, borrowers are obtaining slightly more favorable conditions (even though we're still far from the records of 2021).
For buyers, this development mainly means:
- Slightly lower monthly payments for the same loan amount.
- A slightly higher borrowing capacity (you might aim for a more spacious new development, for example).
- A reduced total credit cost – always good to have.
We can only advise you to perform a [mortgage loan simulation](https://www.plan-immobilier.fr/guide-immobilier/financement/simulateurs) to take stock. Will this be enough to revive new real estate? The question remains, as other obstacles persist (we'll come back to this later).
Despite the slight improvement in rates, the new housing market has not transformed overnight. We observe:
- A decrease in the number of building permits (and it’s mechanical: fewer homes offered, fewer projects completed).
- High construction costs (raw materials, labor, new environmental standards, etc.).
- A persistent gap between supply and demand (not enough is built where there is a strong need).
Developers are therefore struggling to sell their programs. Some new real estate projects are postponed or even canceled before being launched on the market. As a result, prices are not collapsing, and for many buyers, the decision remains difficult.
First-time buyers, who represent a significant portion of the demand for new homes, continue to face several challenges:
- Persistently strict credit conditions: the debt ratio must not exceed 35%, and a personal contribution is often required.
- New property prices that are not really decreasing (and are even rising in some high-demand areas).
- Economic concerns: few people want to embark on a major real estate project if their job or financial situation is unstable.
Even with slightly lower rates, acquiring a new property is not necessarily easier for these buyers. Moreover, we must not forget the crucial (and not necessarily very enjoyable) step of calculating notary fees: an obligatory step, which can also weigh heavily on the budget of future homeowners.
Public authorities have not stood idly by. Several incentives exist to encourage home ownership:
- The **Zero Interest Loan (PTZ)**, extended and (somewhat) relaxed until 2027.
- The **Pinel scheme**, very useful for investors (tax benefits included) and to encourage the construction of rental housing.
- Some local aid, depending on the region, to boost access to home ownership (this is sometimes overlooked, but it's worth checking).
However, while these measures facilitate certain applications, they do not fully offset the rising costs or the administrative complexity involved in developing a new project.
The decrease in rates does not have the same impact everywhere. In large cities where the price per square meter (new or old) is already very high, purchasing power for real estate remains limited (even with slightly cheaper credit). In Paris, Lyon, or Bordeaux, for example, the entry ticket is so high that many households (not just first-time buyers) find themselves excluded from the market.
In contrast, in medium-sized cities or on the outskirts, the effect of the decrease is more noticeable. Prices are more affordable, and gaining a few points of borrowing capacity can really make a difference. Some households then reconsider the "new" option, especially since energy savings (thanks to the latest standards) are often highlighted – and that matters in the long term.
We could also mention rural or semi-rural areas, which have recently attracted a new clientele thanks to remote work (that famous change in habits). But the supply of new houses must follow, which is not always the case.
Another possible consequence of the drop in rates: a renewed interest from investors. It must be said that they were somewhat discouraged by the rise in credit costs, rent control, and taxation (always a sensitive point). With lower rates, profitability slightly improves, which could attract those with a rental project – notably through the Pinel scheme.
New properties have the advantage of being more energy-efficient (complying with the new RE2020 standards). Rents can be relatively high in tight areas, and an investor can more easily justify higher rent for an energy-efficient home. But caution is still advised: everything depends on the location, rental demand, and the fiscal policy of the coming years.
It should not be forgotten that the notary fees calculation can differ from one project to another, particularly between new and old properties. In new constructions, these fees are generally reduced, but it is still essential to accurately assess this cost before any signing. It's better to avoid unpleasant surprises...
The decrease in interest rates offers a respite for borrowers, certainly, but it does not solve all the difficulties of the new real estate market. To witness a genuine recovery, it would require (among other things):
- A more pronounced relaxation in prices.
- Streamlined administrative procedures to accelerate construction.
- A better match between housing supply and demand (including in rural areas).
For now, everyone seems to be waiting for a strong signal, both from buyers and developers. Lower rates may provide the necessary momentum, but it is still only a first step... We will see if the coming months confirm the trend.
Author Audrey on 21 November 2024
Economy and Finance : Credit
Author Audrey on 22 November 2023
Sports and Leisure : Esoterism