As supply and demand decline, new property prices will begin to fall.
It is not enough to underline it, the selling prices of new houses are starting to fall. It does not apply everywhere and for all types of goods, but it is perhaps only the beginning. The specialist “trouver-un-logement-neuf.com” looked at the 10 largest cities in France and the prices shown for 3-room apartments, comparative value.
Prices are falling in half of the surveyed cities. Among the biggest declines: -3% in Lyon since February and -8% in Nice. Also note the price drop of 6% in Nantes and 2% in Montpellier. Lille is only slightly behind, but still steals Toulouse’s title of the big city in France where 3-bedroom new builds are the cheapest. We are at 305,000 euros.
>> Find all property prices for rent and purchase and city by city
Is the reduction still not enough?
For buyers, this is good news that should still be perceived. Unfortunately, these new home price reductions are not enough to compensate for what we will lose on our home loan through the increase in interest rates. Thus, purchasing power in this area continues to decline everywhere. But still a little less where prices fall the most. In Nice, Nantes, Lyon and Montpellier, the monthly installments for the purchase of a new 3-room apartment “only” increase by 5 to 10%. In Paris, Lille and Bordeaux, we are around a 15% increase. And we reach a 20% increase in monthly payments in Strasbourg, Toulouse and Marseille. Three cities that combine rate hikes with price hikes.
A drop in prices to put into perspective for buyers and dangerous for developers. We know that with new construction there are inevitable costs. Those of materials or soil. To maintain their margins, developers should not lower their prices. But the situation has changed. Many of them are even sold at a loss and become fragile. And for good reason, developers must now have at least 50% of the planned housing booked, up from 30% in normal times, at the start of sales to be financed by the bank. In order to attract as many buyers as possible, developers have no choice but to lower prices. And beware, in addition to these project launch discounts, there are still program tails, unsold items that show discounts of around 10% and more.