A survey shows 65.7% of agencies feel political impacts, leading to postponed projects and buyer hesitance in the current market landscape.
In the intricate web of the L’Adresse network, a staggering two-thirds of its agencies find themselves ensnared by the tendrils of government censorship, which casts a long shadow over their operational activities. The prevailing atmosphere among buyers and sellers is one of palpable hesitation; many opt to place their projects on an indefinite hiatus. This phenomenon, unsettling yet increasingly familiar, echoes the sentiments observed during the legislative elections when the real estate market entered a protracted wait-and-see phase, leaving stakeholders in a state of uncertainty.
Following the imposition of governmental censorship, the market has tentatively resumed its activities. A recent survey conducted by the L’Adresse network, exclusively unveiled by BFM Business, reveals that as of December 5—just a day after the contentious vote on the motion—65.7% of L’Adresse agencies reported an immediate impact of the political climate on consumer behavior. The ramifications are stark: a notable decline in inquiries regarding new projects—manifested through diminished calls and emails—coupled with the postponement of ongoing ventures.
On the sellers’ front, it is primarily those who are not in a rush to divest their properties who are deferring appraisals. Conversely, the impact on buyers is even more pronounced. Projects are being shelved, property visits are being canceled, offers are being suspended, and the signing of compromise agreements is being postponed until 2025. The overarching theme here is a “lack of visibility,” particularly concerning taxation, which has led those with the luxury of time—such as investors and second-home purchasers—to delay their decisions.
First-time buyers, too, find themselves in a state of limbo, awaiting potential extensions of the much-discussed zero-interest loan, a topic that has dominated budgetary discussions. Additionally, there exists a pervasive anxiety regarding a possible uptick in interest rates, although current indicators suggest no immediate cause for alarm. In fact, following the government’s fall, the financial landscape has remained relatively stable, with interest rates on French debt experiencing a slight decline over the past week. The mortgage sector mirrors this trend, as interest rates continue their downward trajectory, averaging around 3.3% over a 20-year term—an entire point lower than the previous year. This translates to a significant reduction in the overall cost of a €300,000 loan, amounting to nearly €36,000, as per simulations conducted by Vousfinancer.
Looking ahead, the European Central Bank (ECB) is poised for a meeting on Thursday, where further cuts to key rates are anticipated. Should the buyers’ wait-and-see mentality persist, commercial banks—whose real estate loans are a cornerstone of their portfolios—may be incentivized to perpetuate the trend of lowering borrowing costs.
On the price front, there is a silver lining: while the decline in property prices continues, the rate of decrease is beginning to decelerate. According to data from Fnaim, prices fell by 1.2% year-on-year as of December 1, 2024, a stark contrast to the more pronounced decline of 4.1% recorded at the beginning of the year. The volume of sales will undoubtedly play a pivotal role in shaping sellers’ attitudes and, consequently, pricing strategies. If the buyers’ newfound reticence solidifies, sellers—who had tentatively begun to raise their prices—may find themselves compelled to revert to a downward trajectory.
As we approach the conclusion of 2024, projections indicate that the total number of transactions will dip below 800,000, marking the lowest volume since 2015. In this complex and evolving landscape, the interplay of political dynamics, economic indicators, and consumer sentiment will continue to shape the future of the real estate market.
Albert
December 11, 2024Hope the market will recover soon