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Edition 14 May 2018 - Crédit Agricole S.A.
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  • Edition 14 May 2018

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

    The housing market saw a record year in 2017. We do not feel it likely that the market will overheat in 2018-2019. On the contrary, a slight dip is forecast. For one thing, the gradual refocusing of the Pinel buy-to-let scheme and the PTZ interest free housing loan on areas of housing shortages is forecast to cut new-build sales by 9% in 2018. Secondly, the gradual increase of lending rates combined with rising home prices will nibble away at households' ability to buy and make buyers more hesitant and wait-and-see.

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  • Contents:

    - Recent trends in pre-owned and new-build
    - 2017: a record year for pre-owned
    - 2018-2019: slight fall in the market
    - FOCUS - Impact of the ELAN housing reform plan

  • Extract – Slightly reduced ability to buy

    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). Households' ability to buy has improved markedly in recent years thanks to falling lending rates. Between 2008 and early 2017, households' ability to purchase rose significantly, by 27%, with the affordable surface area rising 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%. By the light of this indicator, prices have become slightly under-valued. Rising prices and the slight increase in lending rates are squeezing the affordable surface area, which fell from 95sq.m. in Q1 2017 to 92q.m. in Q4. The trend should continue in 2018, which will limit the windfall effect and make buyers more hesitant and wait-and-see.

  • Associative topics : Economics | France | Real Estate

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