Real Estate: “No Time to Buy” by Roy Masliah – MySweetimmo

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Roy Masliah, founder of decla.fr

The real estate market in France is going through a period of significant stagnation resulting from several key factors. On a daily basis, I monitor the dynamics and obstacles faced by players in this sector. Here is an analysis of the reasons for this sclerosis and advice for navigating this complex sector.

High prices despite the difficult situation

First, property prices remain high. Sellers continue to post prices that do not reflect the reality of a struggling market. Although today owners are more open to negotiations than six months or a year ago, they maintain high expectations and are reluctant to significantly reduce their prices. This situation naturally slows down transactions.

Financing issues for buyers

At the same time, there are fewer and fewer buyers. The main reason is the difficulty in obtaining financing. Although the situation has slightly improved over the last two or three months, obtaining a bank loan was almost impossible until recently. This uncertainty about funding capacities continues to strongly influence transaction volume.

Two different markets

It is appropriate to distinguish two segments of the current real estate market.

Premium market: These are exceptional properties intended for foreign or very wealthy customers. This segment is doing relatively well, with stable demand for prestigious properties.

Classic market: For regular customers with goods worth around 500,000 euros. This market is much more complex. There are significantly fewer transactions there, and although prices have not dropped drastically, they are still stagnant at high levels.

Why is now not the time to buy?

Several signals indicate that now is not a good time to buy property in France.

Tax increase : We saw a dramatic increase in property taxes in 2023, a trend that should continue this year. Property taxes have sometimes almost doubled, which strongly affects the profitability of real estate investments. Homeowners who rent out through Airbnb or own second homes also face rising taxes.

Asset protection costs : Costs associated with property conservation are increasing. With the new Energy Performance Diagnostic (EPD) requirements, a lot of work will need to be done to make properties available for rent, adding to landlords’ expenses.

Return on investment : Unlike in 2000, the return on investment in real estate is much less attractive today. In the 1970s, buying real estate was not attractive because of the high returns on bank investments. Today, the situation is similar, with insufficient interest on the risk premium.

Strategic expectations

Faced with these observations, it seems wiser to wait for a price correction than to consider buying a property. Current signals indicate an unfavorable trend and it is essential that the risk premium is adequately accrued before closing the purchase. In short, those looking to invest in real estate in France today require patience and caution.

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