Forecast: 5-10% Decrease in French Property Prices for 2023
The French property market is experiencing a slowdown, making it increasingly challenging for individuals looking to buy or sell their homes. The market's dynamic nature is stalling, causing a decline in property transactions. Simultaneously, inflation is affecting the purchasing power of potential buyers, making it harder for them to afford homes at current market prices.
Moreover, the mortgage rates are gradually increasing, which could create further obstacles for people planning to invest in property. The high-interest rates will make home loans more expensive, reducing the number of buyers and increasing competition amongst sellers.
All of these factors combine to make the French property market a tricky arena to navigate. Potential buyers are finding it challenging to save for down payments and make offers that will be accepted, while sellers are struggling to attract offers in a highly competitive market. As the market continues to slow down, homeowners will have to adjust their expectations and pricing to match the current market conditions.
"French Property Market in 2023: Challenges Ahead as Prices Fall and Rates Rise"
After two prosperous years in 2020 and 2021, the French property market is set to face its most significant slowdown in a decade. The dynamic nature of the market is expected to grind to a halt, causing a decline in the number of property transactions. The market slowdown will be accompanied by a 5-10% drop in property prices, making it more difficult for buyers and sellers alike.
Inflation is another factor that could affect the market in 2023, causing a reduction in the purchasing power of buyers. The surge in property prices over the past few years has also impacted people's buying power, with 2020 and 2021 seeing a sharp rise in property values. This has made it harder for potential buyers to save for down payments and purchase homes at current market prices.
Mortgage rates have also risen, compounding the challenges for buyers. From a low of 1% last year, mortgage interest rates have risen to 2.5%, and some experts predict that they could reach 3.5% by the end of this year. This increase is due to mortgage lenders borrowing from banks with higher interest rates, as the European Central Bank tries to control inflation.
As a result, fewer people will be able to afford to buy property, and the market will lose momentum. For instance, the amount that people could borrow in December 2021 was an average of €223,896. However, by December 2022, that amount had fallen to €194,020.
In conclusion, the French property market in 2023 will present significant challenges for buyers and sellers, with falling property prices and rising mortgage rates. Homeowners will need to adjust their pricing expectations, while buyers will need to consider the impact of rising interest rates on their ability to purchase property.
French Real Estate Market Trends: Decrease in Affordability and Sales Expected for 2023
A new study has found that the size of property one can buy with a €200,000 mortgage over 20 years has decreased significantly over the past year in France's 20 biggest cities, with the average reduction in size at 13m2. The decline in buying power is due to the rise in property prices over the past two years, and the increase in mortgage rates from 1% in 2021 to 2.5% in 2022, with predictions of it reaching 3.5% by the end of 2023. This means that fewer people will be able to buy a home and, as a result, the market will experience a slowdown.
The larger estate agent networks are already predicting a decrease of 5-10% in property prices in 2023. As properties remain on the market for longer, sellers will likely take measures to attract buyers, which could include decreasing the asking price. However, the decline in prices will not be a dramatic drop, and the rental market may come under pressure as landlords may be forced to renovate their properties to comply with new regulations, thereby increasing rental costs.
As a result of the rise in mortgage rates, there are fewer buyers, but also fewer sellers who may become reluctant to sell their properties and take on a new one with a higher mortgage rate. According to Century 21, transactions in the housing market have already started to fall, with the market shrinking by 4.1% during the summer of 2022 compared to the same period in 2021. During 2022, house sales decreased by 8.2%, while apartment sales remained more stable at -0.2%.
In conclusion, the French real estate market is expected to experience a decline in both affordability and sales in 2023. While the predicted decrease in property prices will not be a dramatic drop, buyers will face difficulty purchasing properties due to the rise in mortgage rates and inflation, which could lead to a decrease in transaction numbers. The rental market may also face challenges as landlords work to comply with new regulations, which could further increase rental costs.