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Edition October 31, 2018 - Crédit Agricole S.A.
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  • Edition October 31, 2018

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

    After an exceptional year in 2017, the housing market has again been sustained in 2018, but is not showing any signs of a bubble or overheating. On the contrary, signs of cooling have been growing, with a slight dip in sales of pre-owned homes, a more marked drop in sales of new-build homes, and a slowdown in prices and mortgage lending. In 2019, the market will continue to slow very gently, with a slight fall-off in transactions and a slowdown of housing prices.

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  • Content:

    - Recent trends in pre-owned and new-build
    - First half of 2018: signs of cooling
    - End-2018 and 2019: soft market landing

  • Extract – Market consolidation explained by several factors

    The gradual refocusing of new-build support measures to areas of tight supply (Pinel buy-to-let scheme and PTZ interest-free loans). Measures to reorganise the social housing (HLM) sector, in particular with a reduction in rents, leading to a fall-off in block sales to social landlords. The erosion of borrowers' ability to buy due to higher prices for homes; a lack of supply.

    These factors will remain in play in late 2018 and through 2019. In addition, mortgage lending rates, which are still very attractive and have been virtually stable in recent months, could pick up slightly in the months ahead. Even if risky assets are deemed more vulnerable, the rate on 10-year OATs (used as a benchmark for mortgage lending rates) should rise slightly, towards 1% at end-2019, from 0.8% at end-2018, due to expectations of a hike in the ECB's refi rate, the halting of QE (asset purchases by the Central Bank), and higher US long-term rates. 

  • Associative topics : France | Real Estate

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