Real estate in France: Cities most affected by rate hikes - Meilleurtaux.com | Blog

Real estate in France: Cities most affected by rate hikes - Meilleurtaux.com

The latest real estate survey in France shows an alarming decline in purchasing power, linked to rising interest rates on loans. According to the study, published on November 20, a sum of 1,000 euros paid over 20 years allows the purchase of an average of only 53 square meters in the 209 largest cities in France, 20 square meters less than in the last 2 years.

Analysis. Double punishment from rising rates. The rise in interest rates, which started at 1% in 2019, played a crucial role in supporting the population's real estate purchasing power. However, since the surge began in 2022, borrowers have had to pay twice. On the one hand, mortgages, which now''averaging 4.12% in October 2023, are more expensive. At the same time, prices per square meter have not declined enough to offset this increase in interest, resulting in a significant reduction in real estate purchasing power.

Note. Over 22 months, real estate purchasing power has decreased by an average of 20 square meters in the French main cities. In Bordeaux and Lyon, the decrease in available space is 19% and 23% respectively over almost 2 years. In practice, new buyers in Lyon will be able to buy 8 square meters less with a payment of 1,000 euros over 20 years, while for residents of Bordeaux the number is 10 square meters.

There are notable regional differences.

Sale house in Saint-Paul-de-Vence 2 625 000,00 $

France,Saint-Paul-de-Vence

6 Bedrooms

2 Bathrooms

392 м²

Sale flat in Rouen 113 692,00 $

France,Rouen

1 Bedroom

33 м²

Sale villa in Grima 7 864 500,00 $

France,Grima

7 Bedrooms

7 Bathrooms

423 м²

Sale other properties in Paris 1 013 250,00 $

France,Paris

1 Bedroom

1 Bathroom

62 м²

Sale flat in Villefranche-sur-Mer 1 300 244,00 $

France,Villefranche-sur-Mer

1 Bedroom

61 м²

Rent flat in Cannes 13 650,00 $

France,Cannes

2 Bedrooms

1 Bathroom

114 м²

Some cities such as''Neuilly-sur-Seine, Paris and Vincennes have seen a moderate decline in purchasing power, limited to a decrease of 4 square meters since January 2022. This is due to the significant decrease in prices per square meter in these locations in recent months by 6.9%, 6.2% and 5.2% respectively. Charleville-Mézières, a city of less than 50,000 inhabitants in the vicinity of Sedan, has experienced a price increase of around 10% since the beginning of 2022. This has entailed a significant reduction in the area purchased from 168 square meters to 115 square meters with a monthly payment of 1,000 euros. Also Saint-Etienne has experienced a price increase of more than 9% since January 2022, reducing the purchasing power of residents by 51 square meters. Châteauroux (-50 m2), Chalon-sur-Saône (-48 m2) and Mulhouse (-48 m2) complete the list of cities,''where buying power has fallen most markedly.

Alexandra Verlhiak, an economist at Meilleurs Agents, emphasizes that negotiation remains a key strategy for buyers looking to improve their buying power.

What to remember. The rise in interest rates on loans in France has led to a significant reduction in real estate purchasing power, a decline of 20 square meters in 22 months. Interest rates have risen from 1% in 2019 to 4.12% in October 2023, doubling the cost of mortgages. Bordeaux and Lyon show declines of 19% and 23%, while some cities such as Neuilly-sur-Seine, Paris and Vincennes have limited losses to 4 square meters thanks to price reductions. Negotiations are becoming''a key strategy to rebalance loan prices and interest rates, ensuring fair access to property.