This article is a semi-automatic translation of an article originally posted on bfmbusiness
Real estate remains a safe haven. Last year confirmed this trend. With a number of transactions estimated at around 960,000, the year 2018 closed on a total volume almost similar to that recorded in 2017. It is indeed the interest rates still extremely attractive (1.43% on average in December 2018) and unchanged for more than six months, which contributed to the dynamism of the market.
Over the year 2018, the average duration of loans increased by ten months to an average of 226 months, a record level. The contribution rate has never been so low since 1978, stabilizing at 16.1% in 2018, down 16% over the year. The strong economic environment will have contributed significantly to the good shape of the old residential market.
Real estate prices in 2018 vs 2019
Sales prices increased by 2.9% year-on-year at the end of September 2018, compared with 3.9% last year, confirming the slowdown in the upward trend observed since the fourth quarter of 2017. This increase is more pronounced. for older apartments (+ 3.4%) than for houses (+ 2.6%). And according to the preliminary contracts collected by the notaries, prices in the former would continue to grow in the first months of 2019 to reach in February + 3.7% over 1 year for apartments and + 3.5% for the houses.
Old and new combined, from October 2017 to October 2018, prices rose by 3.9% (4.7% for apartments and 2.4% for houses). The annual rise in prices will have subsided throughout the year. From January 2018 to January 2019, the annual price increase would be 5.3% for apartments and 3.9% for houses.
Real estate prices keep rising in Paris
In Paris, prices are still rising; After reaching € 9,500 in October 2018, the average price of a Parisian apartment would be € 9,650 / m² in February 2019, up 6.1% year-on-year. Since the third quarter of 2018, half of the boroughs in Paris have an average price per square meter exceeding € 10,000.
For 2019, if volumes are expected to ease slightly, prices should continue to rise slowly as the ECB halts its asset purchase program and the US rate hike. The capacity of households will thus continue to erode and buyers become a little more wait-and-see in 2019.
What about Developments, New Homes ?
Over twelve months, from December 2017 to December 2018, the number of building permits issued decreased by 4.9%. Although housing starts were close to break-even in 2018 (+ 2% year-on-year), the last three months of 2018 were marked by a sharp drop (-7.8%). This will certainly result in a contraction of homes put up for sale in the first months of 2019. This contraction was already 14% over the first nine months of 2018, 3.9% over the whole of the past year and 16, 7% in the fourth quarter of 2018 compared to the fourth quarter 2017.
This decline in supply led to a slight decline in the number of homes offered for sale, which stood at 108,000 units at the end of 2018, down 0.7% from the end of the year. 2017. The new home sector is facing a lack of products and not of customers, which could ultimately lead to price pressures.
A downturn in 2019?
Several signals suggest a downturn in 2019, especially in the volume of transactions. This decline should logically be linked to a decline in sales and not to a contraction in demand. In any case, this is what the professionals of the new real estate who are increasingly faced with a rare and expensive land, rising construction costs and refusals of building permits. The prospect of the 2020 municipal elections is not going to make things right.
This article is a semi-automatic translation of an article originally posted on bfmbusiness
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