If in recent years, the increase in the minimum wage still made it possible to compensate in some cities for the rise in real estate prices, – also thanks to the fall in credit rates -, this is no longer the case. In the 25 cities in France studied by the real estate loan broker Vousfinancer, real estate purchasing power has declined in 2022, but also since January 2021, with some exceptions.
An increase that does not compensate for the rise in prices and credit rates
In order to compensate for inflation, which should reach 5.4% in June according to INSEE, the minimum wage was increased by 2.65% on 1 May 2022, now reaching €1,302 net per month on the basis of 35 hours. The gross hourly minimum wage now stands at €10.85, after being raised by 0.9% on 1 January 2022 to €10.57, compared to €10.48 in October 2021 and €10.25 in January 2021. In total, the minimum wage has thus increased by €171 net compared to January 2021, i.e. most of the increase observed for 10 years (+ 19% compared to 2012).
“A significant increase but which is far from having followed the evolution of prices in certain medium-sized cities in France, sometimes greater than 60% over 10 years, underlines Vousfinancer. In addition, in recent months, the trend in credit rates has been such that the rise in the Smic no longer compensates for it. Since the start of the year, 25-year rates have fallen from 1.30% to 1.70%, leading to a decrease in the minimum wage’s borrowing capacity of more than €2,000 in just five months (107 €210 against €104,948) which, combined with the rise in prices which continues in most cities, penalizes the most fragile borrowers. »
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A purchasable area of 10.3 m² in Paris to 85.1 m² in Saint-Étienne
With the minimum wage (for a monthly payment excluding insurance equal to 33% of the Smic, by reimbursing a loan over 25 years at 1.70% with 10% contribution) and its evolution compared to January 2022, the observation is final. : the real estate purchasing power of the minimum wage has declined in all cities of France since the beginning of the year.
In May, it varies from 10.3 m² in Paris to 85.1 m² in Saint-Étienne, i.e. a ratio of 1 to 8.5 but which is down given the stabilization of prices in Paris, while the rise continues in Saint-Étienne. The cities where the purchasing power of the Smic is the highest are still Saint-Étienne (85.1 m²), Le Mans (64.5 m²), Nîmes (51.2 m², i.e. + 1.2% compared to to January 2021) and Clermont-Ferrand (50.6 m²), which are also the only cities where you can buy more than 50 m². They are followed by Le Havre (49.6 m²) and Brest (49.3 m²) which pass below this symbolic threshold in May.
Le Mans, Saint-Étienne… the strongest decline in real estate purchasing power
The strongest decline in the real estate purchasing power of the Smic is observed in Le Mans where it fell by 3.4 m² in just four months, but also in Brest and Saint-Étienne (- 3.1 m²), even if it remains very high in these three cities. The reason: they recorded the highest price increases, ie + 4.1% in Brest, + 3% in Le Mans and + 1.5% in Saint-Étienne.
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Lyon, Bordeaux… an area of less than 25 m² with minimum wage
In some cities, the area that can be purchased in May by earning the minimum wage remains less than or equal to 25 m², as in Lyon (19.6 m², i.e. -0.5% compared to January 2022 but +0.2% compared to January 2021), Bordeaux (22.2 m²; -1% compared to January 2022) and Nice (22.3 m²; -0.5% compared to January 2022). Price increases, even if they are now more limited, do not allow low-income households to buy sufficient space in which to live.
Grenoble, Strasbourg… a purchasing power of more than 25 m², but less than 50 m²
Villeurbanne is one of the cities where the real estate purchasing power of the Smic has declined the least, i.e. -0.6% between January 2022 and May 2022, but it remains low: 26.5 m².
In Grenoble and Strasbourg, the real estate purchasing power of the Smic fell this month by 1.3% compared to January 2022 to reach 38.4 m² and 28.3 m² respectively. It is up 0.7% in Grenoble compared to January 2021, but down 1.2% for Strasbourg over the same period.
The decline in real estate purchasing power is similar to Dijon (- 1.5% compared to January 2022). However, the real estate purchasing power of the Smic is appreciable: 43.4 m² in May.
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