"The dead cat bounce. The expression is well known in stock market circles. It refers to a temporary recovery in a bear market that precedes the continuation of the downward trend. Could this adage be applied to the real estate markets?
Values have fallen sharply across Europe and in all asset classes. The price to be paid to readjust to the 450 basis-point explosion in interest rates since mid-2022. For a real rebound, we'd have to go the other way. The most optimistic (or astute) observers anticipate a 200 basis point drop in key rates between their spring 2024 peak and their landing at the end of 2025.
Clearly, this won't be enough. Especially as the financial crisis has been compounded by a production crisis and a crisis of use. However, according to the latest "Emerging Trends in Real Estate" survey by ULI and PwC, one in two real estate decision-makers is confident that the market environment will improve.
The foundations for a new real estate cycle have been laid. But if there is to be a rebound, it may not come through France. Well, not just yet. The dissolution of the French National Assembly and the ensuing political maelstrom have dried up a gently sloping recovery in most real estate markets as interest rates ease.
The permanent sword of Damocles hanging over the executive branch, parliamentary nonsense and the prospect of municipal elections are undermining France's attractiveness and clouding investor visibility. All the more reason to procrastinate or move cash across the border.
So, when you meet the professionals, caution has taken precedence over optimism. In fact, a certain fatalism immediately overshadows an assertive voluntarism.
The rebound is willingly postponed from month to month. For the end of 2025, perhaps. For 2026, surely. As the old saying goes, "Once bitten, twice shy".