What if it was the right time to buy a home or land? This is suggested by the interest rates on real estate loans which are falling over the year 2024, with an average rate of 3.5%-4%. This trend is expected to continue because the government’s financial policy is moving in this direction. The major obstacle is the excessively high cost of real estate and land locally.
0.5% is the drop in central bank key rates over the last 2 months. And how far could this decline go? For Thierry Beltrand, director of IEOM, the Overseas Issuance Institute, rates will not fall much further but these signals are positive for future buyers. “This cut in central bank key rates should be reflected in the rates that banks offer to their clients. And if there is a further cut in central bank key rates by the end of the year, well it would go down a little further.”believes Thierry Beltrand.
At the end of June 2023, the average mortgage rate was 3.75%. Today, the government’s financial policy is moving in the direction of buyers. Registration fees should be lowered from 11% to 7% in 2025, and there is even talk of a zero-interest loan within the cabinet of Warren Dexter, Minister of the Economy, Budget and Finance.
A good thing for Jean-Philippe Pinna, president of the Chamber of Notaries of French Polynesia. “Currently the rates are between 3.7 and 4%. It’s true that going to a 0 rate, for example on a loan of 35 million CFP, would save 70,000 CFP per month! It’s enormous”explains the specialist.
Let’s detail this example with a property priced at 35 million cfp:
- with an interest rate of 4% => 185,000 cfp monthly payment but you must earn 3.5 times (530,000 cfp) the minimum wage to avoid the rule of 35% debt per month.
- with an interest rate of 0% => 115,000 cfp monthly payment and there you have to earn twice the minimum wage (328,000 cfp).
But a major problem lies. The exorbitant prices of land and real estate which can be explained, among other things, by the development of the Airbnb platform, real estate speculation but also and above all by the lack of property in Fenua. “Still very expensive and we have all now identified the reason for all this, it is the absence of housing production. We must create more housing, more offers, obviously when there are more offers the prices are falling”continues Jean-Philippe Pinna.
In French Polynesia, experts estimate that there is a shortage of 15,000 healthy housing units.
On average per year, there are 1,900 sales/acquisitions. Including a hundred made by
first-time buyers.
30 to 50 are new Polynesians (people from outside who settle here).
Between 2012 and 2024, only 128 foreigners acquired property for 20,400 acquisitions.
Jules Bourgat’s report:
1. Could you please introduce yourselves and provide your professional background?
2. How has the current trend of decreasing interest rates on real estate loans affected the housing market in French Polynesia?
3. What role does the government’s financial policy play in encouraging potential homebuyers to take advantage of these low interest rates?
4. In your opinion, what are the main obstacles to buying a home or land in French Polynesia at the present time?
5. How do you see the future of interest rates on real estate loans in French Polynesia and what impact would this have on the housing market?
6. Do you think the planned reduction in registration fees from 11% to 7% in 2025 will be enough to make a significant impact on the affordability of real estate for potential buyers?
7. What do you think about the idea of a zero-interest loan for homebuyers? Can this actually become a reality?
8. How can the high cost of land and real estate in French Polynesia be addressed to make it more accessible to average citizens?
9. What role, if any, does Airbnb and real estate speculation play in driving up housing costs in French Polynesia?
10. What are some of the other factors contributing to the shortage of healthy housing units in French Polynesia?
11. What can be done to increase the number of affordable homes available for Polynesians and encourage more people to become homeowners?
