Real estate prices are currently recovering. Attractive interest rates can no longer contain this rise in prices, especially in major French cities.
Low-interest rates no longer lead to rising property prices
Rates are low and borrowers benefit. On paper, all is well for the better. But in reality, if you take a closer look, the situation is not as sunny as it looks. Indeed, a cloud hovers above the real estate market: that of rising prices. For the French, the impact is not negligible because their purchasing power is started.
Indeed, although interest rates averaged 1.46% last May, for all loan durations combined, stone prices continue their slow upward trend at the same time. . In the past six months, prices rose by 3.6% in France.
In previous quarters, the fall in interest rates was such as to stem the rise in selling prices. But things have changed … The phenomenon is particularly felt in the main cities of the Hexagon. Attractive agglomerations experience this increase more abruptly than in the countryside.
Major cities more affected by rising prices
In rural areas, the price per square meter remains accessible depending on the location of the property compared to a large city. The decline in real estate purchasing power is reflected in a reduction in the number of square meters that can be purchased for an equal monthly payment between two periods. For example, two similar borrowers will not have the same buying area depending on their acquisition date.
As a result, French people who want to invest in the city have no choice but to increase the borrowed capital if they still want to finance a project. For this, two options are available to them. On the one hand, increase the repayment monthly without necessarily lengthening the borrowing period. The debt ratio will be revised upwards but the borrowing rate may remain low. On the other hand, it is possible to borrow more over a longer period.
In case, the fixed rate of the mortgage will be more important. In the end, the total cost of the operation will also be greater since the share of interest will be higher. The price dynamics observed in the stone market therefore have a greater impact on real estate acquisition transactions in the city.