2024-10-30 16:43:00
THE real estate prices and credit rates are falling. Two good news that will give buyers a smile and purchasing power. And even to the most modest. Smicards, whose revenues will increase by 2%, to 1,426.3 euros net per month, on November 1, have seen their lending capacity increase by more than 13% in a year, from 82,109 euros to 93,019 euros, according to the Vousfinancer broker.
Thanks to the 3% (net) increase in the minimum wage, the decline in credit rates (from 4.5% to 3.6% on average over 25 years) and the decline in real estate prices (see below cities for city). Consequence: The purchasing power of the minimum wage increased in one year in the 25 largest cities. From 2 m² in Paris to 12 m² in Le Mans to obtain a loan of 3.6% over 25 years, with a contribution of 10% (of the price of the house) and a monthly installment (a sum to be repaid to the bank each month) equal to 33% of the minimum wage (470 euros).
Saint-Étienne above
Although the minimum wage has been increased nine times since January 2021, the debt capacity of minimum wage workers nevertheless struggles to exceed the symbolic threshold of 100,000 euros. And cities where they can buy housing of more than 50 m² (families have on average 51.2 m² per person, according to the Ministry of Ecological Transition) exist but are not legions.
There are only two among the 25 screened by Vousfinancer. This is half compared to three years ago. These are Saint-Étienne (72 m²) and Le Mans (52 m²), the two least expensive cities in the study. It is also in Le Mans that real estate purchasing power increased the most in a year: +29%. Thanks to the strongest price drop: -12%, in the last 12 months. For other cities, the surface area that a minimum wage worker can acquire varies between 10 m² in Paris and 44 m² in Le Havre (see below).
10% contribution.
To hope to access property, a minimum wage can count on the return of the banks”,more tolerant» regarding modest borrowers. “Banks will try to evaluate the evolution of their revenues and find solutions for these more solvent borrowers thanks to the drop in rates», Says Sandrine Allonier, spokesperson for Vousfinancer. It is up to the borrower to take care of their accounts, avoid overdrafts and benefit from a small contribution of around 10% to cover transfer fees which represent around 8% of the sales price. And, if possible, be able to benefit from the borrowing capacity and remaining living space (amount available each month in your bank account once you have repaid your monthly payment and paid your daily expenses, Ed.) higher.
Another good news could come from the 2025 budget: the expanded zero-interest loan (PTZ). This is a promise from Prime Minister Michel Barnier adopted at first reading by deputies. If the measure is definitively validated, PTZs will thus be able to benefit all new buyers, means sub-conditionsanywhere in France, whatever the accommodation, new or old. A nice boost that can represent around ten thousand euros of contribution for borrowers.
#cities #minimum #wage #purchase #housing #m²
Interview: Understanding the Trends in Real Estate and Purchasing Power in France
Time.news Editor (TNE): Good afternoon, and welcome to this edition of our expert interview series. Today, we’re joined by Dr. Amélie Bernard, a real estate economist and head researcher at the French Institute of Urban Studies. Amélie, thank you for being here!
Dr. Amélie Bernard (AB): Thank you for having me! I’m excited to discuss the current trends in real estate, especially in the context of purchasing power for French citizens.
TNE: Let’s dive right into it. We’ve seen a decline in real estate prices and credit rates, which sounds like good news for buyers. Can you explain how these changes have impacted purchasing power, particularly for minimum wage earners?
AB: Absolutely! The interplay between falling credit rates and declining real estate prices has notably enhanced purchasing power. For instance, while the minimum wage has seen a 3% increase to 1,426.3 euros net per month, the average credit rate has dropped from 4.5% to 3.6% over 25 years. This means that minimum wage earners can now afford to borrow roughly 93,000 euros, a 13% increase from last year.
TNE: That sounds promising! However, it seems that despite these improvements, many minimum wage earners still struggle to exceed the symbolic threshold of 100,000 euros in borrowing capacity. What’s behind this limitation?
AB: Yes, that is indeed a sticking point. While the increase in the minimum wage is beneficial, it hasn’t fully offset the long-standing issues related to housing affordability. Moreover, even though minimum wage workers can now purchase more property compared to last year, options remain quite limited. Only in cities like Saint-Étienne and Le Mans can they buy spaces exceeding 50 m², which is crucial for families.
TNE: That leads to an interesting observation—while some newcomers to the market may find opportunities, the available properties are often much smaller, especially in big cities. Could you elaborate on the disparities in purchasing power across different cities?
AB: Certainly! The purchasing power varies widely from city to city. For example, in Paris, a minimum wage worker can only afford about 2 m², while in Le Havre, that goes up to 44 m². This stark contrast shows how regional markets play a significant role in determining what one can actually afford. Le Mans has experienced the most substantial increase in purchasing power—up 29% this year—due to a significant 12% drop in real estate prices.
TNE: If we look ahead, do you think these trends are likely to continue? Or do you foresee a shift in the housing market that could affect these dynamics?
AB: The overall trajectory will depend on several factors, including economic stability, employment rates, and government policies. If current trends continue—especially with interest rates remaining low—it may be favorable for buyers. However, we cannot ignore the possibility of economic fluctuations that could reverse these gains. Monitoring indicators like wage growth and inflation will be crucial.
TNE: It’s certainly a complex landscape. Do you have any advice for potential buyers, especially those looking to maximize their purchasing power?
AB: Absolutely! I would encourage potential buyers to do thorough research on their local markets, consider locations outside major cities where prices are more favorable, and be mindful of their long-term financial health when taking on debt. Engaging with financial advisors can also provide valuable insights into navigating the lending landscape.
TNE: Great insights, Amélie. Thank you for sharing your expertise with us today!
AB: Thank you for having me. It’s been a pleasure discussing these important trends in real estate.
TNE: And thank you to our viewers for tuning in. Stay informed, and we’ll see you next time for more insights into pressing issues in our world today!