Should you buy or rent your home in 2024?

Buying or renting your main residence? A question that you have probably already asked yourself. With interest rates rising and real estate prices remaining high, the choice between buying and renting is not that easy. On the one hand, renting offers comfortable flexibility. On the other hand, buying makes it possible to build a solid asset over the long term. Before you startBuying a property, find out what you need to take into account to weigh the pros and cons between buying and renting.

State of the real estate market in 2024

2024 is a pivotal year for the French real estate market. After years of growth, the average house price is stabilizing. However, financing remains a real challenge due to the cost of a mortgage: with interest rates around 4%, access to property is more difficult, especially for first-time buyers.

In big cities like Paris, buying a new home sometimes seems out of reach, except for the most affluent households. This naturally pushes many individuals to prefer renting, or even sharing a flat.

In a context where interest rates are high, banks are more reluctant to grant loans, rejecting an increasing number of applications. It is therefore important to clearly define your real estate project in order to determine if your personal and financial situation allows you to considerbuy your main residence, or not.

To define your project, you must At the very least determine:

1. The place (s) where you want to live,
2. The type of housing you are interested in: apartment or house? New or old ?
3. The surface you want,

In the end, it is your ability to finance that will truly seal your decision. If you manage to make your property profitable quickly, then buying is more interesting than renting.

At Kyka, we support our customers in Buying a property with work to be carried out. A partial or total renovation, if done well, rapidly increases the real estate value of a home and allows its owner to make it profitable much more quickly than a new property.

As a bonus, redoing a new apartment allows you to create a space that suits you and in which you benefit from all modern comforts.

”Despite my lack of time and experience in this area, Kyka transformed the purchase of my main residence in the 15th arrondissement into a smooth and pleasant experience. I would highly recommend their services”
Nans R.

When should you buy your main residence?

Becoming a homeowner is a dream that many tenants share. However, before making the big decision to buy, asking yourself the right questions from the start will allow you to avoid pitfalls that could make buying real estate a source of stress.

Carefully assess your financial situation before buying real estate

The current economic context is marked by an increase in interest rates. In November 2023, the average mortgage rate over 20 years was on average 4.45%, compared to only 1.2% in January 2022. In October 2024, real estate rates fell but they are still hovering around 3.50%.

This is why it is crucial to know the costs associated with buying real estate and to make sure that you can bear them without exceeding a debt ratio of 35%.

The price of a property consists of several costs:

• The selling price : this is the price offered by the seller or the average price per square meter multiplied by the living area of the home.
• Agency fees : if you go through a real estate agency, its commission generally varies between 5 and 7% of the sale price.
• Notary fees : the act of buying a property must be formalized, which involves additional costs. They include the notary's fees as well as the various taxes to be paid. On average, they represent around 2-3% of the selling price of a new property and 7-8% of the price of an old home (and are borne by the purchaser).‍
• Mortgage costs : In addition to the interest on the loan, additional costs are added such as application fees, security fees and insurance.

It is therefore essential to have a clear vision of your financial situation before engaging in a real estate purchase. Do you have solid savings? A stable job and additional income?

If so, it can allow you to reduce the amount you borrow and get more favourable loan terms. If you use Kyka, our broker will help you obtain the mortgage that best suits your financial situation. Make an appointment with our team to benefit from the advice of our experts.

”We went through Kyka for our first investment! We are super happy with the result, our apartment is perfect, we were very well supported by Céline and Anton who were attentive and very responsive.
Big plus: the timing was respected almost to the day. We highly recommend!”
Jeanne Sergent

Take into account the expenses related to the property

Even if you have the resources to buy, it is also necessary to anticipate all the burdens on an owner. Indeed, a poorly prepared real estate purchase could lead to an early resale, often synonymous with financial loss.

Here are the main burdens you will face as a homeowner:

• Property tax : it varies between municipalities and tends to increase in many localities, which may increase your expenses in the future.
• Real estate credit : the amortization of a loan can last up to 25 years, which leads to long-term monthly payments.
• Housing tax : although it has been abolished in the majority of cases, it remains a burden for owners of a second home,
• Renovation and maintenance work : as the owner, it is up to you to assume all repair or refurbishment costs. This work can range from small repairs to more expensive renovations.
• Condominium fees (for apartments): also called “fees”, these fees correspond to your share of the costs of maintaining common areas (roof, facade renovation, etc.) and may vary depending on the size of the condominium and the work required.

In short, becoming an owner involves recurring financial obligations that must be carefully evaluated. Before you commit yourself, take the time to quantify these expenses so as not to have unpleasant surprises.

At Kyka, we know that becoming a homeowner can be a big challenge. This is why we are there to support you at every stage of your real estate project, from the search for the ideal property to its renovation and valorization. Our real estate project managers are trained by our interior designers to identify properties that, after a complete renovation, can be of great value and allow you to achieve significant added value when reselling your main residence.

”Kyka is an incredible experience and team! I am the happy new owner of a property that has been entirely sourced and refurbished thanks to Kyka! A first purchase is complicated and scary, so being accompanied under these conditions is simply the best possible experience!”
Jordan Lorho

When to rent your main residence?

The advantages of renting an apartment or a house

The main advantage of renting is its flexibility. Depending on your life plans, it is possible to break the lease safely to adapt to a change of job or for any other personal reason. The length of notice varies by region, between one and three months, allowing you to easily manage your trips.

Renting your main residence often allows you to live in a more spacious home than the one you would have bought. Thanks to tax exemption policies such as the Pinel, Duflot or Girardin laws, certain tense sectors benefit from capped rents.

For the same budget, renting can allow you to take advantage of a larger area than a property to buy, especially in big cities. That said, don't forget to consider all the charges to get an accurate overview of the real costs.

The disadvantages of renting your main residence

Despite its advantages, renting comes with several types of expenses that, combined, can represent a significant portion of your monthly income.

First, there is the rent, which comes back every month. But the costs don't end there.

1. Agency fees : if you go through a real estate agency to sign your lease, you will have to pay agency fees, often equivalent to one month's rent. Fortunately, the Alur law caps these fees, but they are still an expense to be anticipated.
2. Rental expenses : water, collective heating or the household waste removal tax that the owner is entitled to charge you.
3. The security deposit : when signing the lease, you will have to pay a security deposit of at least one month's rent, excluding charges. This sum, although it is refundable at the end of the lease, remains locked for the duration of the rental.
4. Home insurance : mandatory for any tenant, this insurance guarantees your home against various claims, but is a recurring expense to add to the list.

These expenses, even if they are spread over several months, can be a barrier to savings. It then becomes difficult to set aside to make a contribution in the event of a future real estate purchase.

Finally, there is still uncertainty associated with the renewal of the lease. At the end of the rental contract, the owner may choose not to renew it, forcing you to move. This situation is even more delicate in areas where demand greatly exceeds rental supply, making the search for a new home complex and stressful. However, the law requires the owner to notify you at least six months in advance, with a justified reason such as selling the property or taking it over to live there.

Conclusion: is it better to buy or rent your main residence?

As a tenant, you often have more flexibility and greater purchasing power for other personal projects, such as travel or leisure. It may sound tempting, but this facility is short lived.

Renting your main residence means that every month you pay a sum that you can't build anything on for your future. Unlike buying, which allows you to invest your income in a property that increases in value over time, renting leaves you with no financial legacy. Each rent paid is definitively lost, while an owner gradually builds his assets.

Let's take a concrete example: let's say you pay €1,500 in rent per month. Over 10 years, this represents €180,000 that you pay to your owner, with no return on investment.

Conversely, if you had used this sum to repay the monthly payments of a mortgage, you would have invested €180,000 in stone. In this case, this money is transformed into capital, into assets that belong to you. You are not only buying a house, you are also insuring a form of savings.

In the end, mortgage allows you to capitalize on your monthly payments rather than having them go into the pocket of a third party.

Finally, buying offers a freedom that renting does not allow. As an owner, you can renovate, modify, extend or personalize your property according to your desires. Do you want to renovate your bathroom or create a cozy outdoor space? You don't need to ask anyone for permission. It's up to you to decide.

At the moment, the prices of old housing in mainland France have been falling continuously for a year. For example, in the first quarter of 2024, the price of old apartments fell by 5.2% in nine months.

Buy a property to renovate is often an excellent opportunity to quickly increase the value of your assets. Our interior designers and project managers are at your side to identify these rare gems and guide you through all stages of the work.

By entrusting us with your real estate project, you benefit from tailor-made support:

• Property search and negotiation : we find the property that perfectly matches your criteria.
• Architectural design : we ensure that your future home meets your expectations exactly.
• Renovation : our project managers orchestrate the work from A to Z.
• Custom furniture : our teams help you design and furnish your home to make it unique.
• Sale : if you want to sell after a few years, we help you maximize the added value.

In the end, buying rather than renting means choosing to build a solid and secure future. Admittedly, becoming a homeowner requires an initial financial effort, but the long-term benefits are much greater. Call on Kyka to take this stress-free step.