Wednesday, June 26, 2019
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The economic context and taxation weaken real estate projects

How are the French positioned vis-à-vis the real estate market? Le Figaro Immobilier, in partnership with IFOP, conducted the survey on their state of mind vis-à-vis real estate.

Despite borrowing conditions deemed attractive, the French consider that the economic, social and fiscal context undermines their real estate project as shown by a survey conducted by Ifop for Le Figaro real estate with 1,000 French. If they are 71% willing to take advantage of low interest rates (fixed rates to 1.50% on average all durations combined) to realize their dream of real estate, the weight of taxation, the inadequacy of government measures in housing and the social climate are the main obstacles to their desire to acquire.

»READ ALSO – New housing: signs of slowing down

Fears over property tax

Among the main sources of concern, the economic context is judged overwhelmingly (67%) as "unfavorable" by respondents. Then come the regrets about "housing policy". The respondents are 20% to condemn "the insufficiency of the measures announced by the government" with the new housing law Elan (Evolution of housing development and digital) effective since January 2019.

Another black spot, the weight of taxation and taxes that weigh on the owners. The reform of the housing tax provides, eventually, an exemption from it for the majority of homes.
READ ALSO – How to negotiate when buying a new home?

In this perspective, 71% consider that "the property tax will be impacted by the reform of the housing tax". And they fear by a very large majority an increase in the property tax. On the budget side, the French who are considering acquiring property (rather in the former 51% and mostly a house) estimate to spend an average of 186 895 euros on the budget. This represents a decrease of 23,000 euros compared to the same survey conducted in 2014.

On the mobility side, the desire to limit the use of the car as much as possible to gain access to local services and businesses is considered crucial. The use of the car to travel is a barrier for 80% of French people.

In the end, 29% of French people say they have a real estate project in the next two years. It's a little more than in 2014, when they were 27%. Real estate remains a safe bet, especially to build capital as 67% of respondents said. Through this study, which reflects a more fragile perception of a sector that is buoyant in terms of activity with transaction records in 2017 and 2018 (965,000 sales in the former), the beginnings of a reversal of trend are here noticeable. Impacted by the economic and social climate, real estate has more than ever need of confidence.

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