Shoring Up on Property Price News
Volume XX, Issue 44
For those of you following the structural saga of my 17th-century building, the work in my apartment to shore up the ceiling throughout is done. It took one full day with a crew of three working in the hallway to cut the wood and prepare the poles.
Installation was no easy task, trying to determine how to position the poles so that they would not obstruct the cabinet doors and desk drawers, or entry to the toilet so as not to trip on anything in the middle of the night when nature calls! I pretty much cried tears throughout the entire process as I watched my apartment turn into a kind of prison—one which will be my home for the next 10 months until the work actually begins to reinforce the beams. That work is estimated to take six to eight months before I can move back into what will be like a brand new apartment, and not one that’s 350 years old (more or less).
I couldn’t say no to their putting up their not-so-pretty red poles, after the two buildings in Lille fell to the ground, for similar reasons. Of course, the cracks in my apartment that manifested more seriously than in previous times were not nearly as dramatic as those in the Lille buildings, but still…no one wanted to take chances! And it’s tough to argue with that. (Here’s the latest news about it at France 24)
I was never afraid of the ceiling falling on my head. I’ve lived in this apartment 25 years and watched the cracking manifest slowly over time. I lay in bed at night and hear the building creaking, but never thought much of it until I came home after being gone two weeks to discover a door frame in the apartment loose and plaster on the floor. That’s when I contacted the Syndic (homeowner association manager) who sent an architect to inspect the problem. when they opened the ceiling, they found the beams damaged. I suppose I should feel blessed to have detected it early on.
Meanwhile, Interior Designer Martine di Mattéo is coming to my aesthetic rescue. She has already arranged for the ceiling holes to be hidden by planks of white wood and has considered ways of hiding the poles by covering them with white or silver ribbon. That will help, but even sitting here at my desk is challenging as I’ve had to shift my seat to one side and I am forever knocking my elbow on the pole on my left.
Friends who have seen the photos have suggested I take up pole dancing! I think that’s a great idea, but no one pole has enough space around it to allow me to circle it. Oh well. It’s fun to imagine such a thing!
NEWS FROM MEILLEURS AGENTS:
Property prices are falling and stocks are rising: In the major cities of France, the real estate market is looking bleak. Only Lille, Montpellier and Marseille are still enjoying a nice autumnal clearing. Property prices in the main French cities (excluding Paris) are stagnating: 0% change in one month. This is a rare phenomenon that has only occurred three times in four years.
If the previous stoppages were merely seasonal slackening, this counter-performance could well mark a real tipping point for the real estate market in major French cities. This status quo conceals a two-speed market, where the apparent balance of prices is only due to the strong growth of three large cities. Those whose prices remain the lowest in the top 10: Lille (+1%, €3,499/m2), Montpellier (+1%, €3,745/m2) and Marseille (+0.8%, €3,822/m2).
Conversely, the seven other major metropolises have remained in the red since the start of the school year, with strong territorial disparities. While in Lyon and Nantes, prices fell by 0.4% between October 1 and November 1, they lost 0.6% in Rennes, 0.7% in Toulouse and up to 0.8% in Strasbourg. A decline that is accelerating in Bordeaux, where prices have fallen by 1.1% in two months, including 0.8% for the month of October alone.
This downward trend, which affects most major cities, is expected to continue in the coming weeks. The approach of winter, one of the least dynamic seasons for the real estate market, should not reverse the trend.
It has been noted, said, and repeated: real estate prices in Paris are falling month after month. And the beginning of autumn is no exception to the rule, with a further fall of 0.5% between October 1 and November 1. Over the past year, Parisian prices have thus fallen by 0.9%. A decrease is even more marked in the market of the small spaces (-1,6%) than in that of the large ones (-0,2% in one year). In addition, median sale times have tended to increase since the health crisis (currently 69 days compared to 44 in the summer of 2020).
But Paris is holding on: here we are approaching the symbolic €10,000/m2 mark without ever crossing it. Today, it costs an average of €10,346 per square meter to own a home in the capital. And it would still take the equivalent of seven months of consecutive decreases at the frantic rate of -0.5% per month to go back under €10,000/m2. Moreover, 67% of the transactions recorded in the capital since the beginning of June are still above this symbolic price. Only five Parisian districts now have lower prices (the 12th, 13th, 18th, 19th, and 20th). In the other seven, properties are negotiated at more than €12,000/m².
The rise in interest rates is not the only explanation for these drops in property prices. The first reason for this is that the French have lost interest in large cities since the start of the health crisis in 2020. Preferring outlying cities where they could go green, buyers have precipitated the decline in property prices in the largest metropolises. A major indicator of this disaffection is the ever-increasing inventory of properties for sale.
The price rebalancing could have subsided with the perpetuation of the new real estate geography born of the pandemic. On the contrary, it has become more pronounced in recent months with the gradual rise in interest rates (2.15% on average over 20 years in October compared with 1.9% in September, according to the broker Empruntis). The latest announcements from the European Central Bank suggest that average borrowing rates will rise to around 3% in 2023, for all terms.
The combination of these factors will be most noticeable in the major cities, where the effort rate, i.e., the portion of a household’s income devoted to loan repayment, is already particularly high compared to the rest of France. This makes it even more difficult for individuals to become homeowners. This situation makes it even more difficult for banks to be cautious about granting credit, which is pushing them to tighten the credit tap even more. All of these factors reduce the number of solvent project owners in these municipalities and further limit demand.
The main consequence of this erosion of demand in the top 11 cities is that the balance of power between buyers and sellers is tending to reverse. Less aggressive and more wait-and-see, buyers are giving themselves more time to think. In just three months, the number of days needed to sell a property has increased by an average of nearly a week. The average selling time is now more than two months in almost all of the largest French cities.
While it only took 54 days to find a buyer in August in Nantes, it now takes 61 days. A similar observation was made in Montpellier (76 days compared to 71) and Bordeaux (66 days compared to 62). The lengthening of sales times is even more marked in Lyon and Rennes with respectively 11 and 10 days more in only three months!
With sales dragging on, more and more sellers are forced to lower their prices. And all indications are that this situation will continue…
NEWS FROM THE CHAMBRE DE NOTAIRES DE PARIS AND ILE DE FRANCE
The major trends observed since this spring are continuing. A tense economic and social context, less easy access to credit, and significant increases in home loan rates have placed the market in a less favorable context. At the same time, housing is still benefiting fully from household confidence and activity remains very strong.
Fifty-one-thousand-four-hundred (51,400) existing homes were sold in the Paris Region from June to August 2022, i.e., 9% less than during the same period a year ago. As in previous months, and after an exceptional level of activity in 2020 and 2021, the housing market is falling back a little more noticeably (-15% in Ile-de-France) with a 17% decline in the Petite Couronne and 15% in the Grande Couronne.
However, sales volumes for the period are still 16% above the average observed over the last ten years. Paris continues to ride alone with sales volumes up by 4% and more than 10,600 apartments sold in 3 months. According to our initial results, these downward trends, which would still make it possible to maintain a good level of activity, should continue in the coming months. Towards a less marked differentiation in price trends between houses and apartments?
In one year, in Ile-de-France, from August 2021 to August 2022, housing prices rose by 1.9%. As has been the case for over a year and a half, price increases remain much more moderate for apartments (+0.4% in one year) than for houses (+5.3%). In Paris, the price per square meter stood at €10,630 in August 2022, up very slightly in one quarter (+0.9%). In one year, the trend is still downward (-1.2% from August 2021 to August 2022).
According to prices from pre-sale contracts, the price per square meter of apartments in the Capital should be €10,620 in December 2022, at the same level as a year earlier. As has been the case for many months, price changes remain very moderate, far from the strong variations announced by some commentators. From December 2020 to December 2022, prices will evolve between €10,500 and €10,800 per square meter, with slight upward and downward movements.
In Ile-de-France, in one year from December 2021 to December 2022, apartment prices are expected to increase by 1.6%, with price increases still more moderate in the Petite Couronne (2.1%) than in the Grande Couronne (4.2%). Again according to the leading indicators on pre-contracts, prices should be on the decline for houses between now and December, particularly in the Petite Couronne. This market usually enters a phase of price declines once the back-to-school season and its moves are over.
Annual house price increases are expected to be limited to 2.9% for the region as a whole (+0.9% in the Petite Couronne, +3.9% in the Grande Couronne), which would confirm that the easing of tensions in this market, which has been very dynamic until now, is limiting price increases.
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The Adrian Leeds Group
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