The real estate market is slowing in Europe
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“The real estate market will land and we must not panic about it”. Frédéric Violeau, notary in Caen and in charge of national real estate statistics for the High Council of Notaries even believes that “the stabilization is welcome and consistent, after the surge in transaction volumes and real estate prices since the end of the first pandemic-related confinement in mid-2020”. A phenomenon “European and even global which has affected most OECD countries”.
Households were then looking for the extra room they needed, a little more greenery, so many desires that triggered an investment. At the end of 2019, just before the health crisis linked to Covid-19, France exceeded the threshold of one million real estate transactions. A record largely broken two years later, at the end of 2021, with more than 1.2 million transactions carried out. ” Trees do not go up to the skycontinues Frédéric Violeau. Our feeling today is that we no longer buy anything at any price, an economic dialogue is beginning to be restored between buyer and seller. » Notaries expect for this year 2022 “on a downturn, around 1 million transactions, then prices will stabilize », he adds. According to the Century 21 agency network, prices are already stagnating, especially in the big cities, in Paris, Bordeaux, Nantes or Rennes.
It is actually the entire European real estate market that is starting to run out of steam. In an analysis published in July, the rating agency S&P evokes a “soft landing” in the main markets in Europe, and more specifically a “slowdown in the rise in real estate prices: nearly 10% on average in 2021, 5% this year and 3% in 2023”. However, this average hides large disparities between countries, since house prices are expected to fall this year in Sweden and next year in the United Kingdom, according to estimates by S&P Global Ratings. “We have reached a high point in terms of activity and real estate prices”summarizes Sylvain Broyer, chief economist for the Europe region of the S&P agency.
Rise in mortgage rates in the euro zone
This turnaround can be explained primarily by the rise in mortgage rates in Europe, which limit household debt margins. The sharp rise in inflation since the beginning of the year, reinforced by the war in Ukraine, has pushed up long-term interest rates, on which banks base themselves to set their mortgage rates . The European Central Bank (ECB) also began in July to increase its key rates in an attempt to curb this galloping inflation, but this movement was largely anticipated by the market.
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