France: will 2022 be the year of the bursting of the housing bubble?
France, Germany and the Netherlands have led the growth of the European housing bubble in recent years. France in particular saw 2021 as a record year in real estate transactions. Indeed, in 2021 prices increased more in the cities near the coasts, especially on the Atlantic coast in the Pyrenees area, in Brittany and the Mediterranean. You can see this fact in the following map where the brightest color indicates the greatest increase in value over the course of 2021
- Neuilly-sur-Seine (92200): 11.102 € / m2
- Paris (75000): 11,068 € / m2
- Levallois-Perret (92300): € 9,698 / m2
- Boulogne-Billancourt (92100): 9,032 € / m2
- Issy-les-Moulineaux (92130): 7,908 € / m2
- Montrouge (92120): 7,624 € / m2
- Courbevoie (92400): 7,196 € / m2
- Clichy (92110): € 6,784 / m2
- Asnières-sur-Seine (92600): € 6,552 / m2
- Versailles (78000): € 6,465 / m2
- Montreuil (93100): 6,373 € / m2
- Pantin (93500): € 6,131 / m2
- Saint-Ouen-sur-Seine (93400): € 6,050 / m2
- Fontenay-sous-Bois (94120): 5,909 € / m2
- Clamart (92140): € 5,717 / m2
- Villejuif (94800): 5,404 € / m2
- Maisons-Alfort (94700): 5,366 € / m2
- Rueil-Malmaison (92500): € 5,303 / m2
- Saint-Maur-des-Fossés (94100): € 5,257 / m2
- Nanterre (92000): € 5,175 / m2
Yet there are several signs that 2022 will be a very strong reversal year for the French real estate market. Let's see the reasons:
- Slowdown in demand compared to 2022: for the General Commissioner for Development in the 4th quarter of 2021 the prices of new apartments increased by + 4.7%. For the LPI Observatory, the increase was + 4.8% in January 2022. An increase in prices which, however, is accompanied by an increase in advertisements for sales of almost 10% in the 4th quarter of 2021 and a decrease of sales by 3.4%. Hence the high prices have led to a drop in sales;
- The international economic situation is bleak, with dire prospects for the Russian-Ukrainian war and global energy problems. Among other things, Russian buyers have disappeared from the French luxury real estate market. The Chinese ones have a limitation currently linked to the lockdown
- The high values of the properties attract the attention of the municipalities who see them as an easy way to raise money after the covid crisis. Therefore, an increase in the tax burden is to be expected.
- Rising interest rates make it cheaper to borrow and therefore reduce the number of potential buyers.
So the French real estate market, one of the richest in Europe, risks facing a sharp setback in 2022. We will see how profound this phenomenon will be and whether it will also impact on the solidity of the credit sector across the Alps.
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The article France: will 2022 be the year of the bursting of the housing bubble? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/francia-il-2022-sara-lanno-dello-scoppio-della-bolla-immobiliare/ on Sat, 21 May 2022 10:00:20 +0000.