Borrowing rates exert a significant influence on the economy, modulating the ability of companies and individuals to invest, consume and save. In 2023, rising interest rates and cautious bank lending caused considerable disruption in the real estate sector. Will this trend continue in 2024, or will rates stabilize? The experts at the Mobilis Group present their analysis.
2023 was a challenging year for players in the real estate market.
Real estate rates rose sharply, from an average of 2.59% in January to 4.34% in December for 20-year loans.
This trend has had a direct impact on the borrowing and investment capacity of households and businesses.
Buyers were forced to put their real estate projects on hold, leading to market stagnation and leaving sellers in a very delicate position.
The Mobilis Group reported a 21% drop in sales volumes.
Despite this, prices remained resilient, with an average price per square meter similar to that of 2022.
A number of factors have contributed to this rate increase:
-> An unprecedented increase in ECB key rates: In September 2023, the European Central Bank raised its main key rate to 4%. This was the highest level ever recorded since the introduction of the single currency. This decision was aimed at containing the high inflation that had prevailed on the continent since the beginning of 2022.
-> Inflation: Lenders were forced to charge higher interest rates to compensate for the anticipated depreciation in the value of the money lent.
-> Credit supply and demand: The dynamics of supply and demand on the credit market have had an impact on borrowing rates. Sustained demand for loans, combined with a limited supply of available funds, may have led to a rise in borrowing rates.
The first part of the year evokes a downward trend in prices, influenced by rising interest rates and the impact of inflation.
It is also crucial to stress the nuances and variations to be expected in an extremely heterogeneous market. Interest rates have a different impact on different socio-professional categories, leading to a splitting of the market.
For the second half of the year, financial experts envisage the possibility of real rate cuts, subject to the future policy of the European Central Bank. A very plausible situation, since Christine Lagarde has already announced a cut in ECB rates, scheduled for summer 2024.
At the same time, banking institutions will have regained some leeway on home loans, and will once again be on the lookout for new customers.
Consequently, barring any surprises, 2024 should usher in a new phase of credit easing.
This could have the effect of slowing the decline in property prices, which is finally beginning to become more widespread, thus constituting the only dark spot in this economic climate.
The Mobilis Group's teams are at your disposal to help you plan your real estate projects with peace of mind. 01 47 20 30 00.
