Retirement requires preparation, especially financial. Because often this means a drop in income. Meilleurs Agents, specialized in online valuation, provides an overview of possible real estate solutions for future retirees with cities that are most interesting to invest in.
Become an owner before retirement
Housing is the main item of expenditure for French households. “On average, income after retirement is reduced by 27%, which increases the weight of rent in the budget,” the Meilleurs Agents study emphasizes.
First decision: Own your home before you retire. An option that allows you to protect yourself from an increase in the labor rate, that is, the weight of the cost of housing on income.
The study gives the example of a middle-income couple who bought a 61 m² house in 2002 with a 20-year loan and a cost-benefit ratio of 33%. Twenty years later, when they retire, their income increases by an average of 63%. This increase allows them to increase their level of effort by up to 20% on average a year before retirement.
“After retirement and repayment of the loan, the cost of housing becomes zero. Conversely, by choosing to rent and for an identical area of 61 m², a household would have to pay a monthly rent of 832 euros on average today in the 51 largest cities in France, i.e. an effort level of 28%. The latter can only increase with the loss of income caused by retirement. Buying seems like a smarter decision than renting,” analyzes Barbara Castillo Rico, Head of Economic Research at Meilleurs Agents.
In Mulhouse, for example, the year-to-retirement effort rate is 33% for tenants versus 24% for owners.
Lyon, Villeurbanne, Strasbourg… Achieving significant added value
Over 20 years, prices have risen by an average of 172% in the 51 largest cities in France. A couple who bought a house on credit in 2002 could see an average net capital gain of €133,111.
Among the cities where net capital growth is the highest in 20 years, Lyon is at the top of the rankings with +279%. The net capital gain is almost 260,000 euros. Then the top five are Bordeaux (nearly €246,000 in net capital gains), Paris (€233,663), Villeurbanne (€201,268) and Mérignac (€194,354).
The city of Strasbourg also posted a good 20-year net capital gain of €108,319.
Investment in rent
If the rental investment is self-financed, it allows you to receive rent that, at the end of the loan, can supplement your old-age pension.
By investing in a 20m² studio that is self-financed for 10 years until retirement, a household will be able to earn an additional net average monthly income of €235 in France’s 51 largest cities at the time of retirement. The best agents.
However, this kind of real estate transactions in major French cities require an average down payment of €55,221.
Saint-Étienne, Limoges, Metz… A small investment to prepare for retirement
Some cities offer real opportunities, such as Saint-Étienne, where by investing in a self-financing studio for 10 years until retirement and with no down payment (a loan that covers an amount in excess of the value of the property), a household will be able to earn a net monthly income of 151 euros as a pension supplement. In Metz, the contribution will be 6,527 euros on a net monthly income of 182 euros.
Other cities show a net monthly income for such an investment: Grenoble (€191 with a €20,110 contribution), Nancy (€187 with a €11,500 contribution), Colmar (€180 with a €8,241 contribution), Dijon (€170 for a fee of €17,464), Besançon (€168 for a fee of €12,328) and Avignon (€178 for a fee of €11,432).
“However, be wary of the risks of no rent and property depreciation, even if they remain low on the French mainland,” notes Meilleurs Agents.