The return to the university world often involves asking the question of housing, since it is often the opportunity to leave the family nest. Due to the housing shortage that affects the national territory, is it wise to invest in real estate to accommodate your student child? When should you choose to rent? Does the rise in interest rates have a significant impact? The advice of the National Federation of Real Estate (FNAIM) to make the right choice.
Choice: rent or buy
A good number of future graduates are about to join the very long list of “candidates for housing”. For parents and future students, this is an opportunity to choose between rental and acquisition.
These are “two distinct strategies, the advantages of which depend on the cities targeted, the type of property, the budget, the estimated duration of the studies, potential aid depending on the project (allowances, renovation bonuses, etc.), but also the possibility and the desire to build up a heritage”, underlines the FNAIM.
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Besançon: a minimal difference between the two options
If we compare the amount of the monthly payment that a purchase would represent with the average rent for a 25 m² studio, the difference between a loan repayment and a rent is minimal in certain cities.
In Besançon, for example, it will be necessary to pay, always for the same property, 303 € per month if one opts for the rental, against 319 € per month for a purchase over 20 years.
Saint-Étienne: monthly loan payments lower than rent
In Saint-Étienne and Nancy, repayment of a loan for the purchase of a 25 m² studio is even cheaper than rent. Either for the first a monthly payment of credit of €189, against a rent of €268 per month (an amount lower by 30%) and for the second a monthly payment of credit of €362, against a rent of €366 per month (- 1%).
To make your choice, “you have to be careful to take into account all the cost criteria, carefully compare the price of rent to the monthly payments of a loan”, explains Jean-Marc Torrollion, president of the FNAIM.
In Paris, it’s the opposite, it’s better to remain a tenant: €749 per month if you opt to rent the studio, compared to €1,394 per month for a purchase over 20 years (+ 86%).
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Nancy, Amiens, Grenoble… the best rates of return
The rate of return (i.e. the ratio between the annual rental income and its acquisition price) is also an element to be carefully studied. “On the financial side, this is the element that will serve as a reference measure for you to assess the profitability of your investment”, explains Jean-Marc Torrollion.
It is therefore necessary to anticipate all the charges that may weigh on the budget (condominium charges, property taxes, possible work, etc.).
In terms of net rate of return for the acquisition of a 25 m² studio whose median rent is always higher than that of any other apartment, Nancy tops the FNAIM ranking (with 5.3%), ahead of Amiens (5%), Clermont-Ferrand (4.7%), Marseille (4.2%) and Grenoble (4.2%), far ahead of Lyon (2.9%) and Paris (2.5%).
“The rate of return is one indicator among many others. Because in Nice, Rennes or Lille, the rate of return displayed around 3.5% is interesting, but it is to be reduced to the acquisition price (between €110,000 and €120,000 for a 25 m²), which is far to be within the reach of all budgets”, remarks Jean-Marc Torrollion of the FNAIM.
Saint-Étienne: a nice potential gain on resale
For those who would choose to invest, the potential gain on resale is also to be taken into account. However, this varies greatly depending on the city, the economic context and the length of detention. Thus, in Saint-Étienne, according to the FNAIM, this gain would be €2,800 in the event of resale after three years in a context of stable prices. In Grenoble, it would be €667 and €432 in Metz.
The operation would be more interesting with a resale after five years of ownership, a gain of €6,609 in Saint-Étienne, Grenoble and Metz.
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Lyon, Strasbourg, Lille: losses if you sell three years after the purchase
In Lille, in the case of a resale after only three years of detention, if prices remain stable, the potential gain would ultimately become a loss, evaluated at €3,114. It would amount to €3,445 in Rennes, €4,418 in Strasbourg, €5,494 in Lyon and even €12,516 in Paris.
In Dijon, the loss would be €612, but by reselling after five years, we would realize a capital gain of €3,216.
According to the FNAIM, it is therefore necessary to include in the calculations all the costs related to the purchase (agency fees, notary fees, etc.) which can impact the possible capital gain at the time of resale.
On the other hand, by reselling after five years of detention, one would realize a capital gain in all the cities, except in Paris, Lyon and Strasbourg. But this would be the case after five years if prices increased by 2% per year during this holding period.
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