It’s not easy to become an owner in 2023! The real estate sector has been going through a crisis for more than a year against a backdrop of inflation, increasing borrowing rates, significant construction costs and ever more expensive land. And in Burgundy, owners, individuals and agencies are paying the price.
Acquiring housing was Stéphanie’s dream. This quality controller wants to become an owner to build assets for her children. But Stéphanie still has to wait. The bank refused his loan of 85,000 euros for lack of deposit.
“I am obviously disappointed, I could not leave anything to my children and that for me was something very important. There, I pay rent and it is lost, whereas when you are an owner, you have something to us. What I put into the rent, I could put into a loan”she regrets.
And Stephanie is not the only one. More and more French people are no longer able to buy property. The fault is very high interest rates, rising from 1 to 4% in a year and a half. “This means that if we borrow 100,000 euros today, it will cost 45,000 euros, whereas 18 months ago it would have cost 10,000 euros.explains Benoit Arrachart, real estate consultant. “A monthly payment for 100,000 euros will be 600 euros whereas we were at 450 euros 18 months ago.”
In Dijon, the agency where Benoit Arrachart works makes four times fewer visits. • © Romain Liboz – France Télévisions
Consequence: sales fell. “In Dijon, we are seeing a 15% drop in the number of transactions. We are in a period of inflation where customers’ budgets are changing. 15% drop is not bad but we were in three record years of number of transactions at the national level, we will return to pre-Covid standards.”
Today, we no longer sell at prices without negotiation. And the buyer offers a price sometimes 10% below what was expected.
Benoit Arrachart
Real estate consultant
Today, agencies must adapt the way they work. “We try to direct buyers towards brokers so that they can define envelopes correctly and then we offer products that correspond to their budget envelope. Before, if we put a house up for sale, we could have 20 viewings in a week. There, we will be on five visits”continues Benoit Arrachart.
After a year of pushing the doors of several banks, Annie finally obtained her loan. He needed 60,000 euros to buy his parents’ house. “We fought a lot to get it. We had to involve a broker, these were extra costs but it was the only solution.”
Annie had to visit several banks before obtaining a loan. • © Romain Liboz – France Télévisions
A delay which has significant financial consequences. “We didn’t get the house in the conditions we wanted. We wanted to rent the house behind. We lost three months of rent”she assures.
Owners are also bearing the brunt of this real estate crisis. For a year, Thierry Ravel has not been able to sell this 260m² Burgundian villa, built in the 90s. “We are having difficulty selling it given the economic situation. It was put on the market in mid-May, and visits are quite rare. We are asking ourselves questions.”
Either we put the house back in the boxes and bring it out again in a year hoping for a rebound in the market, or we drop the price but that is not our objective given all the investments on this house.
Thierry Ravel
Owner
So to find a potential future buyer, Thierry called on a company that offers rental with option to purchase. She undertakes to find him a tenant. The latter has three years to obtain credit, exercise the purchase option and become an owner. “The property will not remain alone without life, will not deteriorate. We cannot afford to leave it abandoned, that would be a shame. The price is set today and I know that it will be paid in the long term. It prevents me from seeing a deterioration in the price, a significant drop. And given the work, I can’t afford it.”
Thierry has been trying to sell his house for a year, without success. • © Romain Liboz – France Télévisions
Real estate leasing therefore appears to be an alternative to accessing property. But it remains quite marginal, only 5 to 10% of applications are accepted.
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