The homeowners do not shun the real estate market. On the contrary, they make up the majority of borrowers.
57% of borrowers are buying a home for the first time
Really, financial news and especially that of real estate is rich in changes. It must be said that the dramatic drop in rates observed since 2016 contributes a lot. By reaching its lowest level with an average of almost 1.30% in the fall of 2016, the drop in rates was perceived as a real signal for buyers. For the French, this resulted in very attractive interest rates synonymous with cheaper borrowing.
Indeed, for the same capital borrowed, a borrower taking advantage of low rates will see the total cost of the operation decrease. In 2018, rates are up, of course, but they maintain their attractiveness. A category of buyers takes advantage of this period favorable to the acquisition: buying a home for the first time. These are the French who want to access the property by buying a house or an apartment. Recently, rising real estate prices have contributed to the removal of first-time home buyers.
First-time buyers lengthen borrowing terms
Despite the rates, the price per square meter has eroded their purchasing power, especially in major French cities. However, buying a home for the first time have not given up their desire for property. Moreover, more than one borrower out of two is classified in this category. The “primo” represent 57% of the borrowers. These buyers have relied on the extension of borrowing times to cover their real estate acquisition.
Indeed, with the situation of low interest rates, some banks do not hesitate to offer loan offers with a duration of more than 25 years. For 25 years (or 300 months), the average rate observed remains even below the 2% mark. A long-term loan makes it possible to borrow a large amount of capital without necessarily increasing the amount of the monthly repayment. In May, the average effort of buying a home for the first time represents almost 5 years of income against 4.3 for the month of April.
The French are interested in the second home market
Taking advantage of lower mortgage rates, the secondary housing market attracts investors. The latter have a preference for the French coast.
A way to prepare your heritage
Feet in the water, in the snow or in green pastures, France has a multitude of diverse and varied landscapes. The country is so rich in geography that it is necessary to travel miles to enjoy it. But for French people who can afford it, buying a second home is a solution. On the one hand, the purchase of an apartment or a house makes it possible to increase the wealth of the investors. The secondary property can thus be transmitted to the heirs during the succession. It can also be a solution to derive secondary income.
Indeed, depending on the geographical location of the property, it is possible to rent it to individuals. This can be done punctually during the beautiful seasons of sunshine or when the snow is abundant. Depending on their importance, these secondary revenues may cover the maintenance costs of the property but also the different amounts of taxes and charges. According to real estate professionals, the secondary housing market is currently experiencing a real revival of interest.
4 out of 10 investors would prefer to invest in the sea
Like the classic real estate market, it benefits from low interest rates on real estate loans. In addition, rising real estate prices are encouraging investors not to wait any longer.
As for summer vacationers, investors are divided into the sea and the countryside. Thus, 4 out of 10 French people would choose to acquire a property near the coast while they are 2 times less interested in the campaign. This preference is reflected in the dynamics of the market: isolated goods in rural areas have seen their prices fall. Finally for the mountains, it interests only 1 French in 10.
Investment in a second home is a typical French practice. Compare to their European neighbors, they are the champions of the secondary residential market. According to the latest figures from the National Institute of Statistics and Economic Studies (INSEE), France has more than 3 million second homes. But with the new reforms, such as the Tax on Fortune (IFI), remains to be seen if this renewed interest will continue over time.