French Real Estate: Trump’s Trade War Casualty
- While not directly targeted, France's real estate market faces potential repercussions from the international trade disputes initiated by former President Donald Trump, according to sector specialists.
- Séverine Amate, founder of amate network and a member of French experts, and Philippe Waechter, director of economic research at Ostrum Asset Management, both suggest the trade war's...
- Concerns are mounting over the possibility of an economic downturn."The risk of recession has increased sharply in the United States and Europe," Waechter said.
Trump’s Trade Policies Cast Shadow on French Real Estate
Table of Contents
- Trump’s Trade Policies Cast Shadow on French Real Estate
- Trump’s Trade Policies and Their Potential Impact on French Real Estate: A Q&A
- Could Trump’s Trade Policies Really Affect the French Real Estate Market?
- Who Are the Experts Weighing In on This?
- What are the Main Concerns Regarding the French Real Estate Market?
- Is a Recession Likely in France?
- How Could the Trade War Impact Construction Costs?
- What is the Impact of Rising Construction Costs?
- How Are Banks Reacting to the Potential Economic Downturn?
- Are Low Interest Rates Offering Any Relief?
- What is the Situation with Interest Rates Compared to 2023?
- Is Now a Good Time to Buy property in france?
- How is Buyer Confidence Affected?
- Are There Broader Market Impacts?
- What’s the Latest Summary of the Current Situation?
- What About the Rental Market?
- What is happening to Social Housing in France?
- Key Impacts Summarized
While not directly targeted, France’s real estate market faces potential repercussions from the international trade disputes initiated by former President Donald Trump, according to sector specialists.
Séverine Amate, founder of amate network and a member of French experts, and Philippe Waechter, director of economic research at Ostrum Asset Management, both suggest the trade war’s effects could indirectly impact the french property landscape.
Recession Risk Looms
Concerns are mounting over the possibility of an economic downturn.”The risk of recession has increased sharply in the United States and Europe,” Waechter said. He anticipates a challenging first half of 2025, citing potential labor market adjustments that could weaken economic momentum.
Banks Exercise Caution
The banking sector, known for its aversion to instability, is expected to adopt a more cautious approach. However, Waechter notes that current low interest rates and the European Central Bank’s policies offer some relief. Amate confirmed that the ECB’s recent rate decrease of 0.25 percentage points in December is helping to keep credit accessible.
Amate illustrated this with an example: “At 3.5% over 20 years, borrowing remains affordable. For €200,000, it is €1,180 per month, €50 less then in 2023.but the trade war could push rates up by 2026.” She added that while this could pose challenges for first-time buyers, adjustments like reducing the property size could make homeownership attainable. She suggests that now is a good time to buy.
Amate summarized the situation: “Trump’s trade war will create stir in real estate: banks (again) More cautious, rising costs, buyers who reflect. But compared to dissolution, it is indeed less brutal, and the French market has solid bases – shortage of housing, correct rate, intact demand, moral resilient.”
Construction Costs on the Rise
A direct result of the trade war is the increasing cost of building materials, notably steel and wood. Amate predicts this could add 2% to 3% to the price of new housing for developers.
She emphasized the existing shortage in the new housing market. “Customs taxes add imported materials (30% of French steel comes from abroad). An increase of 10% of costs could inflate the price of a new apartment from 2 to 3%.” While some developers might delay projects, the housing shortage will maintain pressure, preventing a market collapse. Potential buyers may also shift their focus to older properties, she said.
Diminished purchasing Power and confidence
Real estate purchases require both financial resources and confidence in the future. Both Amate and Waechter pointed out that the global situation stemming from Trump’s policies is impacting consumer confidence. Amate recalled a 20% drop in sales in June-July 2024 due to uncertainty surrounding tax regulations. “The trade war is a world shock, not local, with more progressive effects on real estate. Yes, some will report their purchase, but not massively. The needs (family, move …) do not evaporate.”
Potential buyers might choose to postpone purchases and remain in rental properties. However, Amate noted a concerning trend: “It is that we have a rental park which is not renewed and which is drying out.”
Waechter predicts that the social housing sector will be the most severely affected. “We can see that there is a request that is not satisfied becuase there is not enough investments,” he said.
He characterized this as “A societal problem: mayors have reluctance on people who will come and settle in their commune if we put social housing in addition.” He suggests that municipalities may continue to resist building the legally mandated 25% of social housing due to the current economic climate.
Trump’s Trade Policies and Their Potential Impact on French Real Estate: A Q&A
Could Trump’s Trade Policies Really Affect the French Real Estate Market?
Yes, according to sector specialists, the international trade disputes initiated by former President Donald Trump could indirectly impact the French real estate market. While not a direct target,the repercussions of these policies are expected to trickle down into the French property landscape.
Who Are the Experts Weighing In on This?
Two key figures are cited in the analysis:
Séverine Amate: Founder of amate network and a member of French experts.
Philippe Waechter: Director of economic research at Ostrum Asset Management.
What are the Main Concerns Regarding the French Real Estate Market?
The primary concerns revolve around the possibility of an economic downturn,rising construction costs,diminished purchasing power and confidence,and a potential crisis in the social housing sector.
Is a Recession Likely in France?
Concerns are mounting regarding the risk of recession in both the United States and Europe, as per Philippe Waechter. He anticipates a challenging first half of 2025, citing potential labor market adjustments that could weaken economic momentum.
How Could the Trade War Impact Construction Costs?
A direct outcome of the trade war is the increase in the cost of building materials, particularly steel and wood. Severine Amate predicts this could add 2% to 3% to the price of new housing for developers. Customs taxes on imported materials, like steel (30% of French steel comes from abroad), exacerbate this issue.
What is the Impact of Rising Construction Costs?
Rising construction costs could inflate the price of a new apartment by an additional 2% to 3%. While some developers may delay projects, the existing housing shortage will likely prevent a market collapse.Potential buyers might also turn their attention to older properties.
How Are Banks Reacting to the Potential Economic Downturn?
The banking sector, known for its caution, is expected to adopt a more conservative approach. Rising interest rates are always a concern for the real estate business.
Are Low Interest Rates Offering Any Relief?
Yes, current low interest rates and the European Central Bank’s (ECB) policies are providing some relief.The ECB’s recent rate decrease of 0.25 percentage points in December is helping to keep credit accessible.
What is the Situation with Interest Rates Compared to 2023?
Séverine Amate provides an example to illustrate how borrowing remains affordable. At 3.5% over 20 years, borrowing remains affordable. For €200,000, the monthly payment is €1,180 per month, which is €50 less than in 2023. however,she also mentions that the trade war could push rates up by 2026.
Is Now a Good Time to Buy property in france?
Séverine Amate suggests that, despite the potential challenges, now could be a good time to buy. She noted the French market has solid bases, including a shortage of housing, reasonable interest rates, and intact demand.
How is Buyer Confidence Affected?
Both amate and Waechter pointed out that the global situation arising from Trump’s trade policies is impacting consumer confidence. There was a 20% drop in sales in June-July 2024 due to uncertainty surrounding tax regulations. Potential buyers may postpone purchases and remain in rental properties.
Are There Broader Market Impacts?
Yes.The trade war is viewed as a “world shock, not local” that has progressive effects on real estate. While there may be a lag, needs for housing (family, moving, etc.) do not disappear.
What’s the Latest Summary of the Current Situation?
Séverine Amate’s summary: “Trump’s trade war will create stir in real estate: banks (again) more cautious, rising costs, buyers who reflect. but compared to dissolution, it is indeed less brutal, and the French market has solid bases – shortage of housing, correct rate, intact demand, moral resilient.”
What About the Rental Market?
A concerning trend is that the rental market is not being renewed and is, in fact, drying up.
Waechter predicts that the social housing sector will be the most severely affected. There is a demand that is not being met due to a lack of investments. He also states that municipalities may continue to resist building the legally mandated 25% of social housing.
Key Impacts Summarized
Here’s a quick summary of the expected impacts:
| Impact Area | Description | Source |
| :——————- | :—————————————————————————————————————————————————————————————————————————————— | :—————————————– |
| Recession Risk | increased risk of economic downturn in the united states and Europe. Anticipated challenges in early 2025 due to potential labor market adjustments. | Philippe Waechter, Director of Research |
| Bank Caution | Banking sector expected to be more cautious. | Philippe Waechter |
| Interest Rates | ECB rate decrease of 0.25% is keeping credit accessible. Potential for rising rates by 2026.| Séverine Amate, Philippe Waechter |
| Construction Costs | Increased cost of building materials, especially steel and wood; could add 2-3% to new housing prices. | Séverine Amate |
| Buyer Confidence | global uncertainties impacting consumer confidence, leading to potential postponement of purchases and impact on the rental market. | Séverine Amate, Philippe Waechter |
| Social Housing | The social housing sector will be the most severely affected, with municipalities potentially resisting building the legally mandated 25% due to the economic climate. | Philippe Waechter |
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