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Edition February 2, 2018 - Crédit Agricole S.A.
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  • Edition February 2, 2018

    France - Housing Market: Recent developments and outlook for 2018-2019

    The housing market saw a record year in 2017. The market is fairly unlikely to surge in 2018-2019. On the contrary, a slight dip in the market is forecast for two reasons. First, the refocusing of new-build support measures on areas where supply is tight. Second, an erosion in borrowers' ability to buy, with the slight increase in mortgage lending rates and a marked increase in the price of homes.

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  • Content:

    - Recent trends in pre-owned and new-build
    - 2017: a record year
    - 2018: slight drop in transactions
    - Focus – Impact of the housing plan and new tax measures

  • Extract - Households' ability to buy

    Households' ability to buy, – in other words, their "real estate purchasing power" – has improved markedly in recent years thanks to falling lending rates. Between 2008 and early 2017, households' ability to purchase rose significantly, by 27%. The affordable surface area rose to 95sq.m. in early 2017 compared with 75sq.m. in 2008. This has been made possible by the sharp drop in lending rates, whereas prices have fallen very little over the same period, by a total 4%. In recent months, however, that ability has begun to decline somewhat. Rising prices and the slight increase in lending rates are squeezing the affordable surface area, which fell from 95sq.m. in Q1 2017 to 91q.m. in Q3. The trend will continue in 2018, which will limit the windfall effect and make buyers more hesitant and wait-and-see.
  • France: Household ability to purchase homes

    At each period, we calculate the surface area an average household can buy at market prices, lending rates and mortgage duration in line with an affordability ratio of 30% (mortage repayments/income). This indicator thus measures a household's ability to purchase a home. The surface area that this average household can afford changes cyclically around an average surface area of about 90sq.m.

    France: Household ability to purchase homes
  • Associative topics : Economics | France | Real Estate

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