With the rise in rates, are we heading towards a two-speed real estate in the region?


With the rise in rates, are we heading towards a two-speed real estate in the region?
Written by madishthestylebar

More expensive credit, demanding banks which retort files, binding rate of wear, persistent imbalance between supply and demand, high prices: becoming a homeowner in the former Languedoc-Roussillon could become more and more difficult in the future.

Should we be worried about rising interest rates, the health of the real estate market and the ability of households to access property? Tensions are confirmed in a sector that has hitherto been rather flourishing, particularly in the former Languedoc-Roussillon.

By raising its key rates this Thursday, July 21 for the first time since 2011, in response to galloping inflation, the European Central Bank confirmed the end of a long period of easily accessible money. Historically low, with an average of 1.06% last December, rates have been rising ever since. In one semester, they increased by 0.4 to 0.7% depending on the banks and the trend will continue.

More demanding bankers, more refusals

Consequence: more difficult access to credit for individuals. A more marked finding in the former Languedoc-Roussillon, where purchasing power is low, where real estate prices remain high and where properties for sale are scarce. With, on the list of the most attractive cities, Montpellier and Sète, followed just after Narbonne, then Nîmes and finally Béziers, Carcasonne and Perpignan.

“Bankers continue to lend but are becoming more demanding on profiles, explains Laurence Deschatrette, a broker who has worked for 15 years in the Montpellier market. We are starting to have refusals, mainly for investor profiles, or for insurance problems. for older people. Even 40-45 year olds who have no health problems and have good records find themselves faced with usurious problems”.

Worries for buyers without contribution

Because another phenomenon impacts the market: the wear rate, supposed to protect buyers. Threshold of the total cost of credit (including interest, loan insurance, guarantees, administration and intermediation costs) beyond which the bank can no longer grant credit, it is set each quarter by the Banque de France. However, its increase, limited during its revision on July 1, is not correlated with the increase in interest rates observed, leading to loan refusals.

“For the moment, the files pass because the bankers need contributions from customers. But in the next six months, there will be a mismatch between borrowing capacity and market prices”, warns Laurence Deschatrette. “A good file three months ago is no longer good today, adds Dominique Pellier, real estate agent at ArthurImmo. A whole section of our population, that which has no contribution, will soon no longer be able to buy. This is the paradox of a poor region like ours, with high prices, many buyers, few properties for sale and banks that apply increasingly drastic conditions. of the rich and those of the poor”.

Towards discrimination in access to credit?

However, the period remains favorable to buy. Even if they exceed 2% at the end of the year, credit rates remain cheap, far from the rates of 3% in 2014, 6% in 2001 and a fortiori from… 16% in 1980, after the two oil shocks.

And they remain below inflation. “We are still on a dynamic market in the region”, analyzes Jérôme Feriaud, president of the Chamber of Notaries of Gard, who notes an increase in the volume of transactions in the first quarter, more compacted since April-May, like prices. “Everyone is very attentive to what’s next. We are heading towards a period when the real estate market is less flourishing”, he adds, referring to “discrimination in access to credit if the rate of wear and tear do not get on”.

With its large number of second homes, Hérault and Pyrénées-Orientales in the lead, the former Languedoc-Roussillon will perhaps not be a large region of owners in the future. “In 2007, the candidate Sarkozy had said that he wanted a France of owners, recalls Bertrand Malquier, president of the Fnaim Languedoc-Roussillon. Today it is a utopia. The market has increased more strongly than the power of household purchases. And with the rise in interest rates…”

Towards the end of the price spike

After a first half of 2022 marked by a slight rise in prices in the former Languedoc-Roussillon, the curve is bent. “The soaring prices are over, notes Bernard Malquier. For the past few weeks, we have observed a slowdown in the rise. Disinflation should accelerate. We no longer have a sharp increase like in 2020 and 2021, with the exception of Sète” But prices remain at high levels, sometimes up to €8,000 per square meter. They should stay there as long as the supply is so much higher than the demand.

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