Good news for real estate agents! According to the Xerfi office, perspectives on medium terms are quite encouraging thanks to the French government’s measures. A recent study made by the Crédit Foncier shows that real estate professionals seem to worry about the evolution of purchasing power. Figures show that 74% of them are considering an imminent prices drop for resale French properties (52% of them) or a sales stagnation or a decline (for 78% of them). Don’t worry; the three next reports highlight the positive environment in real estate.
Some attractive interest rates
The real estate market is particularly well-oriented since several months, according to interest rates drop to 2.25% (for 15 years), 2.60% (for 20 years), and 3.15% (for 25 years) in February.
If these rates are falling, that is because banks’ resources cost is particularly low. And this situation will last until a new inflation.
An easing program will be launched from March until September, 2016. It will deal with public and private bond purchase (60 thousand million Euros per month).
According to the current purchasing rate, adding 50 thousand million Euros per month will help to low the rates of the Eurozone countries. For France, the 10 years OAT (fungible Treasury bonds) have fallen under 1%, which means a fixed rates relief for mortgages.
Banks in favor of mortgages
Banks are able to keep their margins offering mortgages under 2%. Banks even seem to be ready to stretch award criteria because of hard competition between banks and resources cost decrease.
The zero interest loans are coming back
The zero interest loan come back is now available for old properties but the terms are still restrictive. It applies to old properties located in some areas (generally in rural areas) and if renovation work is made within 3 years. The easing of these terms aims at boosting the real estate sector and increasing the number of loans granted to first time buyers to help them buying their first property. The real state sector is not the most threatening one, the number of transactions increased gradually since the 90s from 500 000 transactions to 730 000, but customers became more demanding.
They don’t hesitate to introduce competition between professionals, which leads to a lower in fee income and an increase in communication costs. Some estate agencies have to close whereas real-estate agents are flexible and dynamic, so that they progressively take market shares thanks to their reactivity.