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Edition July 26, 2017 - Crédit Agricole S.A.
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  • Edition July 26, 2017

    France - Housing Market: Recent developments and outlook for 2017-2018

    The housing market was very active in 2016 and in the first half of 2017. The recovery is mainly linked to two factors: extremely low mortgage lending rates, which are now starting to edge up, boosting sales through a windfall effect; and the new-build stimulus plan with the Pinel scheme and the strengthening of the PTZ interest-free loan. Is this strength likely to persist, at a time when lending rates are timidly embarking on an uptrend? Two main scenarios seem possible, in our view.

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  • Content:

    - Recent trends in pre-owned and new-build
    - 2016-early 2017: a highly sustained market
    - 2017-2018: two possible scenarios

  • Extract - 2017-2018: two possible scenarios

    Scenario 1: Mortgage rates rise hardly at all. Strong market momentum is sustained. The rate of price increases rises towards 6-7% over 12 months. A classic housing boom gets underway like that observed between 2000 and 2007. In addition to the classic support factors and low interest rates, a sales-prices upward spiral develops, with price increases driving more sales due to the expectations of capital gains and the desire to buy before prices go even higher. The increase in sales keeps prices rising, etc.

    Scenario 2: Mortgage lending rates see a more marked increase. The rate of price rises picks up gradually. The combination of higher lending rates and higher prices (and possibly slightly less favourable tax measures) erode affordability as defined above. A proportion of buyers feel unable to afford to buy and become hesitant and sit on their hands: sales slow. A similar scenario materialised in 2012-2013, following the post-crisis rebound of 2010-2011.

  • France: Existing housing sales and prices

    Prices for pre-owned homes are forecast to rise 4% in 2018, due to the lagged effect of higher sales in 2017, and look set to slow in 2019.

    France: Existing housing sales and prices
  • Associative topics : France | Real Estate


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