As rates rise and real estate loses its purchasing power, an increasing number of buyers are turning to poorly rated but less expensive housing.
Are energy grids the right real estate plan today in a completely down market?
Poorly insulated houses and flats, with simple glazing, in which we are hot in the summer, cold in the winter and whose heating costs two to three times more… And yet it is precisely this type of housing that more and more French people are turning to for two years.
According to the latest economic report from notaries, the share of housing classified as F and G in total sales increased by 7 points in two years.
It rose from 11% in 2021 to 16% in 2022 and reached 18% in the second quarter of 2023. Today, almost every fifth house sold in France has an energy grid. This is more than their total weight in the housing stock in France (17% of houses classified as F and G).
Buyers are not driven to these properties by a sudden passion for poorly insulated housing. It is rather an opportunity to buy cheaper in a difficult situation.
Just like cheap supermarket products
Energy filters are kind of the equivalent of cheap supermarket products. We know it’s less good, but above all, it’s cheaper. With rates rising (more than 4% on average in October), buyers lost 25% of their real estate purchasing power in two years. However, “strainers” have an average of 15% discount compared to the same much better insulated one.
And it can be even cheaper depending on the department. Classifieds site Goflint has launched a simulator that allows you to compare average property prices based on their ratings.
We performed a simulation in several departments for a T3 apartment with a rating of B (well rated) and another with the same apartment but with an F rating (poorly rated).
The differences can be very significant with a 24% difference in Rhône, 28% in Bouches-du-Rhône and even 63% in more rural departments like Cher.
Surprisingly, they are in departments where real estate is expensive like in Paris or Bordeaux, where there is no big discount or even premium like in Gironde.
This explains the fact that old stones are valued in these cities, but they have the worst energy efficiency.
Restrictions on “mesh”
But is it worth buying an energy strainer at that price? Do you get what you pay for? For 46% of French respondents in the OpinionWay survey for BigMat, these houses are a good investment. A share that even rises to 58% among young adults (ages 25-34), who have less real estate purchasing power.
However, you need to be careful and not underestimate the limitations. Starting with utility bills two to three times higher than a much better insulated property. Especially with the expected increase in electricity prices in 2024, which could be around 8-9%, costs could skyrocket.
It should also be noted that these properties will no longer be available for rent in the coming years. The regulatory schedule states that new leases will be prohibited for properties classified as G from January 1, 2025 (2 million housing units affected) and in 2028 for F properties (3.2 million housing units).
So work will need to be done to improve the diagnosis. Which can sometimes completely cancel out the gains made with the discount. According to the Agency for the Environment (Ademe), it takes on average €16,000 to get one energy class in a family home and €26,000 to get two. Before jumping into the sieve, you need to do the calculations carefully.