“It’s a huge financing problem that is currently weighing on the market,” according to Corinne Jolly, CEO of PAP

What is the real state of the real estate market? This evening’s eco guest is Corinne Jolly, president of PAP, who comes to share her analysis of the overhaul of the Zero Rate Loan (PTZ), which has just been extended, as well as her vision of the future market.

franceinfo: The PAP real estate platform specializes in sales, long-term rentals, as well as short-term rentals. The All Saints’ Day holidays begin at the end of the week. Is there any effect of recent events on bookings?

Corinne Jolly: This year’s All Saints’ Day holidays will be quite good, so a priori, no real effect of recent events. Above all, there was a weather effect. We had a beautiful month of September, quite sunny and that made a lot of people want to extend the summer. So rather an increase in reservations, around + 10%, particularly in the South, which had suffered a little this summer from the fear of the heatwave.

The first part of the budget of the finance bill was adopted yesterday, with a 49.3 from the government. It contains an amendment which concerns tourist rentals, such as Airbnb. The tax reduction from which some furnished tourist accommodation benefits will be reduced. Will this relax the rental market a little?

I do not think so. This will really play a role at the margins, it will not change much in the fact that, generally speaking, tourist rental benefits from a much more flexible regulatory framework than residential rental. For thermal strainers for example, it is very restrictive for residential rentals, whereas on the other hand, for tourist rentals, no problem.

“For tourist rentals, you can rent F or G accommodation without any constraints. No rent control either. So there are plenty of reasons which push certain owners to favor tourist rentals.”

Corinne Jolly

at franceinfo

Another measure contained in this budget, the PTZ. The zero-interest loan will be muscular, potentially extended to six million more French people. Will this represent a breath of fresh air for first-time buyers in particular?

It’s always a help and we’re not going to spit on it in the current context. Obviously, this will not compensate for all the current difficulties of first-time buyers. I remind you that they still have two big problems. The first is the conditions of access to credit. Currently, banks require 20% personal contribution. If you want to borrow 200,000 euros, you need to have 40,000 euros. For a first-time buyer, this is still huge.

PTZ can solve this problem.

Yes, but the ideal would still be for the conditions to become more flexible. Because personal contribution is really blocking. And then there is the context of rising rates. We started to exceed 4%. Next January, we will certainly have an average interest rate of 5%. It’s a huge financing problem at the moment which is weighing on the market and obviously not going to be completely offset by this.

“Financing is the number one problem because it is not a lack of appetite for real estate. Real estate still remains quite secure.”

Corinne Jolly

at franceinfo

So there is a desire to be owners, including among young people, in order to prepare for the future and in particular retirement. But there is a real financial problem. Prices have risen enormously over the last 20 years and one of the reasons they rose was because interest rates were low. Now interest rates have gone back up, but prices have barely fallen. So there is market balancing to be done. We don’t really believe in the collapse because there is always a lack of supply.

How much has the number of transactions fallen on PAP?

There, we are roughly at 20% less sales. But previously these were years that were historic records. So it’s quite normal that it’s going down. Now, the market is still slowing down. Above all, we cannot see the end of the tunnel. In 2024, this will continue a little longer, because rates will remain high. It takes time for the market to balance. It is not blocked because there are always people who need to buy, with all the constraints linked to real estate: divorces, births, marriages, deaths. All this still keeps the market going. We must also not forget that there is a whole part of the population that is not necessarily affected by difficulties in accessing credit. I’ll give you a figure from the latest study we did on PAP: a third of buyers buy with cash. These are people who buy after having resold their previous goods. When you are 60 years old, you no longer buy with credit, you resell your property.

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You said you’re starting to see a drop in prices. Of what order?

We are around minus 3% nationally. These are the metropolises most affected, notably Paris. Around -5%. So yes, we see it, the price drop. And there are spared areas.

Like Brittany.

Yes, the areas that start from lower down. In fact, it’s a bit of a rebalancing. This is why for us, it is not alarming.

“It’s not a crash, it’s a rebalancing of the market.”

Corinne Jolly

at franceinfo

The areas which are falling the most are those which had risen the most and the other areas continue to progress. Somehow, those which were a little late today are popular because they offer better prices.