Real estate market trends in 2023
Although real estate is perceived as a "safe investment" and is of constant interest to investors, the real estate market remains a fluctuating market.
2022 has just come to an end and it is now time to take stock of the real estate market in order to better understand the year to come.
Whether you are planning to buy a property, build a new home or invest in a rental property, it is important to consider the feasibility of your project while taking into account the trends and events in the real estate market.
Despite an inflationary context, the French real estate market has remained globally on a good dynamic in 2022.
In 2023, it is the volume of real estate transactions that could well slow down. Indeed, landlords may not be willing to adapt to the new market codes and refuse to lower their selling prices, resulting in a blockage of transactions.
How do you imagine the real estate market in 2023?
Following the sharp increase in real estate credit rates, it is legitimate to wonder about the decline in real estate prices in 2023.
When it comes to taking stock, there are two schools of thought: the cautious and the optimistic.
By 2023, property prices could be falling in some major cities, while in others they could be rising.
Indeed, despite rising inflation, the end of 2022 is marked by a stagnation or even a decline in real estate prices in major cities. In 2023, we can expect a slowdown in the real estate market in France.
What are the new HCSF measures for 2023
Created in 2013, the High Council for Financial Stability (HCSF) is a body responsible for the control and supervision of the financial system in France. It is the authority that sets the criteria for accepting credits and the framework for bank loans.
Some 2022 standards will also apply for 2023:
- The repayment term may not exceed 25 years.
- The debt ratio is limited to 35% of the borrower's net income.
In 2023, the level of usury is the subject of debate in the field of real estate credit. There are several usury rates depending on the type of loan, this threshold corresponds to the maximum rate at which a loan can be granted. Setting a usury rate protects borrowers from being offered excessive rates, and thus plays a regulatory role.
The High Council for Financial Stability has set a usury rate to 3.6% in 2023 from 3.5% in 2022, this increase should make it easier for allow banks to grant real estate loans more easily .
What are the trends in 2023?
The various factors that will impact the real estate market in 2023 are numerous: inflation, purchasing power and the war in Ukraine. In 2022, the real estate market held up well against the economic context in this sector.
In 2023, as the real estate market enters a new cycle, the new usury rate should give banks a little more flexibility to finance projects that were previously blocked.
To meet the needs of the ecological transition, the Climate and Resilience Law will bring many changes to the real estate market.
These new provisions aim to fight against thermal flats and thus to prohibit the renting of very energy-intensive housing.
This will have a lasting impact on the park as well as on all real estate professions. These incentives may lead to a decrease in transactions, as lessors may be led to desert the rental market and move towards the furnished tourist market.
If not, the Climate and Resilience Act can bring beautiful real estate opportunities to life in the market. The new criteria DPE (Diagnostic de Performance Énergétique) criteria may allow for negotiations on the sale price of a property.
Invest VS sell in 2023
Real estate is one of the few sectors that has resisted successive crises.
Real estate investment has always been considered a safe investment. Unlike a bank investment, a real estate investment allows you to acquire a tangible asset.
Reasons to invest in real estate:
- Mortgage rates are historically low.
- Boost your retirement and benefit from the rent on your rental property, or pay no rent at all.
- A market that remains dynamic despite the crises it faces.
The price of real estate is not only dependent on supply and demand, but also on interest rates and the economic situation. In 2023, all the indicators seem to be green to sell your property.
Conditions will be more favorable in the first half of the year to sell quickly and at the best price. Indeed, the usury rate is going back up and the loan rate remains at a decent level, which is favorable for future buyers.
How to invest against inflation?
Inflation is a constant or temporary increase in the general price level of goods and services.
For more than 40 years, inflation has reached a level never before recorded: 6.2% in December 2022. Inflation has a direct impact on the interest rates of real estate loans. Faced with inflation, sellers may be forced to sell their property at a lower price.
Real estate investments are often considered inflation hedging investments. Appreciation in value, increased income, as well as depreciation in debt are the three aspects that make real estate an excellent tool for fighting inflation.
Historically, the real estate market has proven to be a stable investment during inflationary periods.
In France's largest cities, between 2021 and 2022, prices rose by 5.4%. In an inflationary climate, growth in the real estate market is set to continue. Buying a house in a rural area such as Collioure can be a good investment. In these areas, real estate remains on a good trend: 5% increase. Since the health crisis and the spread of telecommuting, employees have been moving out of the cities.
Tips for investing in real estate in 2023
Before investing, it's important to understand local and national real estate market trends.
Buying an undervalued property can lead to greater profits when reselling or renting.
In addition, renovations can increase the value of the property and give it a rental return. .
You must avoid underestimating rental expenses or overestimating rental income.
Investing in different types of properties and in different regions reduces risk and maximizes returns. It's vital to realize that, logically, the higher the return, the greater the potential risk.
Investing in real estate in 2022 has been more complicated than before, but the coming year still holds good investment opportunities. It is above all your situation (professional and/or financial) that allows you to define the right time to invest.