<h2 class="article-intro">According to an indicator published by Fnaim, the purchasing power of households has been declining for two years. Credit rates, still very competitive, are no longer enough to offset the surge in prices. Announcer of a market reversal?</h2> </p><div><p>Years go by and look alike, in the real estate market. The still very low credit rate environment is boosting the sector, which has a very bright 2018 balance sheet. Sales volumes are still up 0.3%, with 965,000 transactions recorded over the year, according to the National Real Estate Federation (Fnaim). But, the continued increase in prices, estimated at 2.7% nationally, is reflected again by a decline in the purchasable area. Between 2017 and 2018, considering a debt capacity of 1,000 euros per month and taking into account the evolution of prices and credit rates, the purchasable area fell by several square meters in many cities: -4, 3 square meters in Bordeaux, -3.6 in Lyon or -3.2 in Nantes. In sum, the rise in prices continues to nibble on the purchasing power of households, whose reduction is no longer offset by competitive rates.
This indicator of real estate purchasing power, which has been decreasing for two years, could paradoxically suggest a market turnaround. Because the upward trend is destabilizing a large number of households, which are fewer and fewer to buy in major cities. Even worse, if credit rates rise – which is not excluded at least from the second half of the year – the market will find itself in a situation of blockage. "If the rates were to increase significantly, the chisel effect would be formidable," warns Jean-Marc Torrollion, the president of Fnaim.
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The last time purchasing power fell so much was at the beginning of 2011, as shown in the graph below. At the time, real estate prices were skyrocketing, following the stimulus policy initiated by the Sarkozy government (zero-rate loan in the new, Scellier device, etc.). Too quickly maybe … which ended up dropping the purchasing power of households. The following ? A necessary decline in prices and credit rates to resolve buyers.
The indicator of real estate purchasing power FNAIM, reflects the amount of surface purchasable each year in the existing for a fixed monthly payment of 1.000 euros, a repayment term of 20 years, average interest rates real estate (Banque de France ) and the FNAIM index of prices. This approach does not take into account transfer and personal contribution fees. – FNAIM
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