Is it better to buy or rent a property?

Between buying or renting a property many are asking the question. Although the COVID-19 epidemic had an impact on French real estate projects, the real estate market has rebounded from deconfining. Indeed, according to an IFOP survey, while 54% said they were reviewing their real estate project following COVID 19, the real estate market remains resilient (1) . Household confidence still seems to be resisting. As a result, since the containment, the search for second homes has seen a resurgence of interest, as have houses and generally property with outdoor spaces. Thus, between purchase and rental, it is necessary to choose the solution that corresponds to each situation.

Buy or rent, choose a real estate project

According to INSEE, just over one in two French people owns the country (2). But a project to buy or rent a property must first and foremost be strictly defined according to its situation. To make the choice between buying and renting, you have to take into account your mobility, your ability to contribute, the rates of loans and loans, but also the state of the real estate market in your region. It goes to say that buying your main residence offers several advantages.

The first list is to avoid paying rent with lost funds. Indeed, with the purchase this dimension of loss does not exist. The buyer pays a monthly monthly payment that makes him own. In this sense, it allows for a kind of forced savings. The owner can capitalize and see for the long term. The choice of purchase can also be interesting if one wishes to bequeath a heritage. According to INSEE, real estate accounts for 61% of households’ gross wealth (3). However, the costs associated with the purchase must also be taken into account. An owner must actually pay a property tax in addition to the housing tax. He must also finance the maintenance, renovation or equipment of his dwelling. Condominium expenses must also be taken into account in the context of a collective building.

Thus, even if homeownership is one of the major issues, the status of tenants may be better suited to certain profiles. In addition, for an equivalent budget, it is generally impossible to buy the equivalent of a rental unit. Becoming a homeowner admits to having some financial capacity. Thus the rental even if the rental of a property does not bring the satisfaction of the purchase it remains in the short term more profitable.

Even if rent inflation is observed, the tenant can also save to plan to buy a property. It can save the difference it should have paid for a home purchase. In addition, beyond the financial aspect, renting is a solution for people who have to have professional mobility for example. Indeed, the rental is more flexible. It allows notice within 1 and 3 months depending on the geographical area. It is also a solution for active students and young people who enter the workforce or who wish to be a roommate to share the costs of housing.

Buy or rent property
Between buying and renting, it is important to take into account one’s status and financial capacity

Negotiating and apprehending a real estate project

So in the context of a project to buy or rent a property it is necessary to properly analyze its status. But we also need the state of the market or loan rates. By 2020, these rates are falling across the country. This is good news for borrowers. In particular, they will be able to finance their project at a rate between 1.10% and 1.25% over 20 years (4) . To understand this market, real estate experts can accompany people who have a project. They will help them make the best possible investments. In the city of Bordeaux, there are several real estate experts’ offices. Indeed, in Bordeaux, it seems important to study his real estate project in advance especially because of the very important attractiveness that has only intensified over the years.

It is true that in recent years, the city has been very successful. The establishment of the LGV Paris-Bordeaux line has made it one of the most attractive cities. In 2018, real estate reached a record 10% increase (selexium.com/marche-immobilier-bordeaux/). In 2020 prices will begin to fall and stabilize. The price of an apartment costs 3% less between 2018 and 2019, however some neighbourhoods are difficult to access. Indeed in the historic centre the old buildings are highly sought after, but sold at gold prices. The price per square metre is 8000 euros around the Place des Grands-Hommes. Therefore, to buy or rent property young households tend to move away from the city centre to benefit from lower prices than those observed in the agglomeration.

Thus a real estate project is a project that must arise from a reflection to be profitable. This includes an update on its situation, the market situation and home loan rates. Both purchase and rental have advantages and disadvantages that must be chosen based on their current situation. To date, it will be said that the market is on hold but it resists the impact of COVID-19 thanks to household confidence. In addition, the crisis may well spur buying trends for homes outside cities with exteriors.

Sources:

(1)” The French and the real estate market: Impacts of the health crisis and containment on real estate behaviour and the state of mind of the French“, IFOP, Survey for Optimhome May 2020
(2)“Owners – Renters”INSEE, Presentation of 2018 figures
(3)“10 per cent of households hold almost half of total wealth,”INSEE, Study published December 19, 2019
(4)”Milleurcurrent real estate rate“, Borrowing
(5) “The real estate market in Bordeaux: prices and developments to be expected in 2020”,Elexium

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