Côte Vermeille: what changes are expected for real estate in 2023?
13 December 2021
Each year, the return to school brings its procession of questions and changes for real estate. 2023 is no exception to the rule with major uncertainties related to the COVID-19 crisis. Real estate reference in the Pyrénées-Orientales, our Côte Vermeille agency tries to raise the veil on a very particular re-entry.
Interest rates in 2023Faced with the ongoing global economic crisis, the European Central Bank (ECB) has considerably relaxed its monetary policy. Everything is being done to reduce borrowing costs and facilitate lending in the euro zone. In its desire to support a badly shaken economy, the ECB is keeping its key rates at historically low levels. The real estate credit rates which have not increased since the beginning of the crisis, should remain very attractive! Low-cost borrowing is essential for the real estate market in the short and medium term.
Access to real estate credit in 2023This is probably where the shoe pinches! Lending institutions have seriously tightened their conditions of access to credit. Banks and credit organizations favor the most solid files to the detriment of those deemed to be more at risk. Concretely, the files of wealthy households who apply for a mortgage for the purchase of their main residence have every chance of being accepted as long as they respect the recommended debt ratio of 33%. The amount of the contribution required from first-time buyers tends to increase. The professions most exposed to the current crisis are quite simply dismissed!
Good to know
Faced with the crisis linked to COVID-19, the recommendations of the High Council for Financial Stability (HCSF) aimed at limiting the household debt ratio to 33% and the duration of loans to 25 years are increasingly strictly applied .
The attitude of sellers and buyersTaking into account its financial stakes, any real estate project for sale as for purchase is carried out only by absolute necessity or in a reassuring framework. The current economic outlook is bleak. The Banque de France forecasts a fall in GDP of 11%, while the Ministry of the Economy only envisages a return to normal activity in the third quarter of 2023! In this context, many sellers and buyers could postpone their non-essential real estate project. The real estate market, which had reached 1 million sales in 2019, should therefore decline sharply. However, there are a few reasons to be optimistic! After the crises of 2008, 2009 and 2011, the French are much more resilient. Thus, the confidence of real estate project owners is now higher than it was during the subprime crisis!
Real estate prices in 2023Everywhere in France, both supply and demand are contracting. Despite this,real estate prices continue to rise in 2023. In this matter, it's all a matter of time! The crisis is still too recent to make its mark on prices per m². It should also be remembered that these are calculated on the most recent sales recorded by the notary, that is to say negotiated before or at the very beginning of confinement! If demand were to contract for a long time, there is no doubt that sellers will have to revise their lower price claims.
What about the Pyrénées-Orientales?With a wonderful climate, exceptional landscapes and a sought-after lifestyle, the real estate market in the Pyrénées-Orientales can count on the influx of seniors looking for a pleasant retirement! The benchmark study published in 2017 by INSEE noted a significant migration linked to retirement in the urban area of Perpignan: buyers who most of the time have little or no need to finance themselves on credit! This clientele should therefore always be there in terms of acquisitions, regardless of the severity of the crisis in the coming months. The phenomenon could even be accentuated by the desire of many city dwellers traumatized by confinement, to live in the countryside or at least to have a real garden!
Box: Want a change!
According to an IPSOS survey, one in 5 French people experienced their confinement badly because of housing deemed unsuitable. This observation fuels a real desire for change. 52% of these French people want to move to housing with an exterior. This is an important asset to highlight for the sellers concerned.Violent and sudden, the current crisis is health. Unlike the previous ones, it does not originate from the excesses of the financial system. As such, the recovery could be rapid and strong. From then on, the Pyrénées-Orientales will have to offer a high quality real estate offer to all those who no longer want to live as before! Sources: https://www.mysweetimmo.com/2020/07/07/conjoncture-post-covid-19-ou-vont-les-prix-de-limmobilier/ https://madeinperpignan.com/les-flux-de-population-dans-les-pyrenees-orientales-constat-et-enjeux-pour-lavenir/