Decrease in start -ups, settlement of housing sales, lengthening marketing deadlines, stopping prices, then starts of decline: all signs are there to indicate the start of a reversal of the real estate situation. Should we speak of a crisis, a term constantly used and especially since the late 1990s, during the growth phase of real estate activity and price increase ?
The term crisis can be useful to mobilize opinion, but it does not light up the market mechanisms underlying current developments. On the contrary, his undifferentiated use suggests that the normal situation (of “ not crisis ) Would be that where real estate activity progresses in price stability. However, one of the specificities of the real estate market is precisely that the growth of the activity is concomitant in the rise in prices and that, conversely, decrease in activity and lower prices go hand in hand. This phenomenon has been verified many times in the past, as in Île-de-France during the boom in the late 1980s and the reversal that followed.
The current situation is therefore not new ; She was expected. After years of uninterrupted progression of activity and the rise in prices, a slowdown should inevitably occur, if only because of the decrease in solvent demand. The only question brought to the moment at which he would intervene and especially on his magnitude.
The increase in rates and the crisis of subprime were the triggers, but they don’t explain everything. The deceleration of the prices had started in 2007 and we have observed decreases since the beginning of 2008 in certain locations. In the Paris agglomeration, according to the notaries, prices stabilized in the first quarter and the volume of transactions is significantly decreasing. The old market observatory of the Fnaim Also notes a quasi-stop in the price increase (+ 1.7 % over a year in the second quarter of 2008), which, taking into account an inflation rate of 3.3 %, corresponds to a decrease in constant euros.
Very diverse markets
An element to take into consideration is due to the diversity of housing markets: it is clear that the strongest decline concerns the least tense markets, unlike what had happened during the break -up of the real estate bubble in 1990, which had only concerned the most expensive areas, Paris and the Côte d’Azur, where prices had previously increased. The rise in prices for the past ten years has affected all markets, and even all developed countries, except Germany and Japan. However, it is today in the least tense markets that the fall in construction is the most brutal. It is not a secret for anyone that, in certain locations, in particular small and medium -sized cities, the supply of housing, in particular new rental, is today abundant ; It is therefore logical that construction marks the step.
Credit offer
It is convenient to explain the crisis by closing credit taps. Would there be a Credit Crunchlike what we observe in the United States, that is to say a situation in which banks refuse to lend, in particular due to a more severe appreciation of the risk ? Admittedly, the American crisis may have led some establishments to pay more attention to the risks on real estate loans, but, in France, the sinistrality on the credits to accessors remains extremely low, with regard to Anglo-Saxon standards. In any event, if the problem was there, the guarantee fund for social accession would be part of it to resolve it, since its role is precisely to guarantee the loans granted to modest first-time buyers. The considerable losses suffered by many establishments, in France and worldwide, concern, it should be remembered, loans made to American borrowers. On the other hand, bankers, as they explain themselves, face a serious problem of liquidity. The reduction in the cash savings cash and the attraction of savers for investment products such as life insurance make banks growing growingly with the back of their loans. And they are now having difficulty finding the long resources they need to make fixed rate loans.
However, this liquidity crisis is the direct backlash of the crisis of subprime. Most French financial institutions held assets composed in part of credits subprime titled, but, due to the opacity of the securitization system, were unable to assess the risks of loss they encouraged. Hence a crisis of confidence that hinders the functioning of the interbank market and, consequently, induces refinancing difficulties and the tightening of the credit supply. It remains to be seen how long this crisis of access to liquidity will last in a global economy where liquidity seems to remain very abundant.
However, competition for market share remains lively, but it is more selective. We know that the housing loan is in France a product or loyalty product and that holders of an account have an average of seven products. THE “ good customers Banks, having personal contribution, still obtain loans whose rate is not very high compared to the rates of state loans, but the competition fits and the offer is more hesitant when it comes to modest primary ancients which must borrow almost all of the price of their operation. Among these, some try to turn to establishments that agree to lend them to more expensive conditions and often at revisable rate. However, revisable rates are as high today as fixed rates ; They therefore bring no advantage in return for the risk of increased rate.
However, although around 1.3 points at the minimum level reached in 2006, fixed rates are still relatively low (around 5.5 % on average). However, over twenty years, an increase in this level results in a reduction in borrowing capacity of around 10 %. The rise in short rates, which determine the level of variable rates, has been much more sensitive. The increase in rates is therefore higher for the most modest borrowers, who, moreover, must finance a higher part of their operation by the loan.
A problem of a particular nature is also posed by those who must have recourse to a relay loan: in this case, the fear of falling prices plays in full, since the risk is not that of insolvency, but that of the mevent or the fall in prices, that is to say bad sale. In short, it is not the risk of customer failure that retains banks. The fact remains that, if the tightening of the credit offer is not the main factor in the reversal, it probably accelerates the magnitude. General price increase for ten years, saturation of demand in certain locations, increases in rates, tightening of the credit supply, all these elements go in the same direction and have a cumulative effect. Marketing times are growing and “ good customers Who can easily get credit know that they can take their time. The prospect of a drop in prices, even if it is, is not a factor that encourages rapid decisions. All this explains the still relative brutality of reversal.
To a more volatile market ?
Households forced to resell their accommodation without intention or possibility of immediate redemption can be in difficulty, but it is first the actors of the new construction sector who will suffer from the speed of adjustment. Many of them had anticipated this movement, although the volatility of prices and the variations in the volume of constructions, even transactions, have been lower in France in the past than in Anglo-Saxon countries. This was due to the size of the rental sector, at a relatively low debt rate, but above all to the importance of state intervention in this sector.
Today, public power is able to avoid overly brutal jolts ? The community is condemned to intervene, whether it is to help households to face the rise in prices or to avoid a drop in prices ? It would not be a question, as in the United States or Spain, of coming to the aid of endangered to expulsion, but of playing a contrasting role. Social rental construction has long played this role, but we know that today it is not enough to program housing Hlm To realize them: local authorities must be convinced to accept them in their territories.
Social accession has also played this role and the examples are numerous, whether it is the launch of the loan at 0 % or cart plan. But the solvabilizing power of the aid is considerably reduced: in the new segment, the average amount of the aid provided by the loan at 0 % compared to the amount of operations went from 10 % in 1996 at 4 % in 2006. The new system implemented with the social partners gathered within 1 %, THE Pass–Land is extremely powerful, since the allocation of a subsidy of a modest amount by a local community, triggers very strong additional aid from the national plan, but pending its extension to the collective, it remains limited to the individual house and, consequently, to the least tense areas. Before the reversal, everyone agreed on a priority objective, lifting the brakes to the construction to curb the price increase, and to introduce a little social mix on the tense markets. Public aid in matters of accession can have the effect of smooth the level of activity to preserve employment and the production apparatus, but their primary objective cannot be to prevent price adjustments which are desirable. The reductions that we observe today may lead to the relationship between the price of housing and household income, which had increased considerably, becomes more bearable.