Let's talk about the housing crisis that will interest some of our students next fall. But let's talk about it in a global way, taking into account both buying and renting, which sheds more light on the subject.

In 2024, real estate agency failures rose by 225% compared with the previous year. According to a study on business failures published by the BPCE banking group, which brings together the Caisses d'Epargne and the Banques Populaires, 225% is obviously considerable. What are the main reasons for this?

When it comes to housing, there are old and new, but here too, let's look at things from a general point of view. As far as purchases are concerned, there is of course therise in lending rates, and therefore the reluctance of banks: many would-be buyers, limited by their budget, have had to abandon their project, or move on to a less expensive property that did not really match their wishes. The situation is likely to improve in 2025, as interest rates are expected to stabilize at around 3%, which is the benchmark - historic, one might say - for the cost of borrowing.

However, the constraints imposed by the Energy Performance Diagnostic ( DPE), classified from A to G, are disrupting supply. Since January 1 of this year, five million homes in category G have been off-limits to tenants. With F-rated locations, the number of homes that will no longer be available for rent in 2028 will soar, which obviously has an impact on investors. Already, in 2024, Paris had 290,000 unoccupied homes, i.e. 20% of the rental stock: you can imagine the figure that will appear at the end of this year.

So the housing crisis has two causes: one economic, the other political.
But the economic cause is itself largely political in its underpinnings: by giving upcheap energy from Russia, by having curbed the use of nuclear power over the last forty years, we have increased the cost of energy consumption, which is essential for construction, but also for activity in general, since, as we have already shown here, energy consumption is the translation of wealth.

In this context, the credit rate reflects good economic health, unless, of course, we create a bubble by pumping up the muscles, turning the credit plate without guaranteeing solvency, as in the 2008 crisis.

As for the political cause, it lies in the very practice of the DPE, imposed by the legislator. As a result, in many cases, prospective buyers can no longer buy or rent. So, if it's true that interest rates are falling at the moment,access to rental property will become even more difficult because of the DPE, thus reducing supply and creating an overheating that will benefit the owners of well-classified homes, by virtue of the law of supply and demand, which states that what becomes scarcer becomes more expensive.

A good deal for the richest, a bad deal for the impoverished middle classes, continuing a scenario already half a century old.

Sources :

• property rates
• ouest france, mortgage
• forbes, ECB rate cuts

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