“The nail in the coffin of the real estate market”: with the rise in interest rates, professionals in the sector are worried

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Soaring credit rates coupled with a drastic tightening of loan granting conditions have largely contributed to making the Toulouse real estate market “sluggish”.

The fight against inflation involves increasing credit rates. This fundamental economic rule, somewhat forgotten in recent years due to the pandemic and the war in Ukraine, has been dramatically brought up to date. The first victims of this tightening of screws: candidates for home ownership and rental investors. The mortgage rate has been multiplied by five in two years (maximum 5%). This level had not been reached for 15 years.

“It’s the nail in the coffin of the real estate market. We had gone to excess by giving access to free money, but there this increase is very strong in a very short time, without the emoluments of buyers following the same slope, “insists Sébastien Bénet, president of Fnaim Haute Garonne. .

The market is slow

This spectacular rise has greatly increased the debt capacity of households. In 2021, for a property listed at 300,000 euros with a rate of 1%, we reimbursed 1,400 euros per month. Today, for individuals who have the most limited guarantees, with the same monthly payments, they can only borrow a little over 200,000 euros. This spectacular rise in rates was accompanied by a serious reassessment of the amount of contributions.

For an individual, it is necessary to count 20% of the total amount of the transaction. For a rental investor, 30%. “Banks no longer even take rental income into account when calculating debt capacity. This is yet another brake on the restart of activity, ”analyzes the president of the FNAIM Haute-Garonne.

Result: the market is sluggish. It should normally be regulated by prices. In this case by a drastic reduction in the amount of real estate. Like in Bordeaux where the price per m2 has fallen by 14%! In Toulouse, the experts agree on the fact that a fall in prices could begin but that it will not have this magnitude.

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