Housing market and households wealth

By Edouard Jousselin with Simon Ray

In 2017, the French real estate market continued its recovery. It was fueled by households’ borrowing capacity: household income increased and lending conditions remained favourable. This situation can be explained by low interest rates and long loan terms. After rising by 20% between 2014 and 2016, households’ borrowing capacity stabilised in 2017.

Chart 1: the real estate market recovery continued in 2017 - Year-on-year % change Sources: Insee-Notaires; Ministry of the Environment, Energy and the Sea

The French real estate market has improved, in particular as a result of the very favourable lending conditions: the latter have increased households’ borrowing capacity. This capacity has grown by nearly 20% since 2014. This is chiefly thanks to lower interest rates followed by an increase in the duration of the loans, both related to an exceptionally accommodative monetary policy. A summary indicator helps measure this improved borrowing capacity.