| Ramzi Chamat
In a globally fragile economic context marked by various crises, the real estate sector, often considered a barometer of economic health, is showing concerning signs of weakness in several regions worldwide. After witnessing turbulence in real estate markets in China and the United States, we now observe similar trends in traditionally stable and robust markets like England and France. This article explores the evolution of this global real estate crisis, its implications for buyers, sellers, and markets, and examines potential measures that could be taken to mitigate the impacts and restore stability.
The global real estate crisis, already evident in China and the United States, continues to expand, now affecting renowned stable markets such as England and France. Experts are questioning the potential impact on other markets, including Switzerland, and the measures that governments and financial institutions could take to stabilize the situation.
After observing signs of weakness in Chinese and American real estate markets, experts note a significant drop in property prices in England and France. In England, home prices experienced a -1.9% decline in August, representing a cumulative drop of -4.6% over the past 12 months, the largest since 2009. In Paris, a market once considered robust and stable, prices also declined by -4.4% year-on-year.
This emerging real estate crisis has significant repercussions on both buyers and sellers. Homeowners are hesitant to sell in a declining market, and potential buyers are wary due to rising mortgage rates and monthly payments. Negotiations are prolonged, and sales volumes decreased by nearly a quarter in the second quarter of 2023 compared to the same period in 2022.
The average interest rate on real estate loans in France has nearly quadrupled, rising from 1% in December 2021 to nearly 4% in August 2023. This increase has led to a nearly 25% increase in monthly payments for households seeking homeownership compared to early 2022, putting a strain on budgets and prompting many potential buyers to exercise caution.
Faced with this global real estate crisis, governments and financial institutions are urged to intervene to stabilize markets and prevent a deeper crisis. Banks have become more stringent in granting real estate loans, and experts closely monitor economic and real estate indicators to anticipate future market trends.
The current real estate crisis raises questions about the resilience of global real estate markets and the need for intervention to mitigate its impacts. Continuous monitoring of the markets and an assessment of economic policies will be crucial in understanding the evolution of this crisis and determining the necessary measures to support global real estate market stability.
The global real estate crisis is intensifying, and markets once considered stable and robust, such as England and France, are now affected. Buyers, sellers, and financial institutions face new challenges, and increased vigilance and strategic intervention will be essential to navigate this period of uncertainty and maintain the stability of global real estate markets.