France Real Estate: Île-de-France Sales Plummet

The Notaires du Grand Paris report reveals a 10% decline in real estate sales in Île-de-France. Discover the market outlook for 2025.

The Notaires du Grand Paris have recently unveiled their latest report, shedding light on the current state of the real estate market in Île-de-France. It is, alas, a tale of woe, as the region grapples with a significant downturn, with sales plummeting by 10% year-on-year and an astonishing 39% when juxtaposed with the prosperous year of 2022. As we delve into the intricacies of this report, we must ponder the state of play and the outlook for 2025.

The second-hand residential real estate market in Île-de-France has experienced a pronounced decline, with the third quarter of 2024 witnessing a stark 10% drop in sales compared to the previous year, culminating in a mere 28,710 transactions. This downturn is particularly acute in the realm of old apartments, which have seen a decrease of 11%, translating to 20,100 sales, while old houses have fared slightly better with a 6% decline, amounting to 8,610 sales. When we cast our gaze back to 2022, a year that could be described as a veritable boom, the drop in transactions is a staggering 39%, equating to a loss of 18,000 transactions over the same timeframe.

As for prices, the narrative is one of decline, albeit at a decelerating pace. The average price of second-hand apartments has dipped by 5.2% year-on-year, settling at 6,150 euros per square meter in Île-de-France. In the illustrious city of Paris, where the price per square meter hovers around 9,520 euros, the annual decrease is slightly more pronounced at 5.5%. Houses are not exempt from this trend, experiencing a decrease of 5.3%, with their average price now standing at 330,400 euros in the region. Since the zenith of the third quarter of 2022, apartment prices have plummeted by 10.3% in Île-de-France, with Paris witnessing an even steeper decline of 11.8%. Houses, too, have seen their values diminish by 10.5% during this period. Projections for January 2025 suggest a continuation of this downward trajectory, albeit at a more moderate rate, with estimates hovering between -1% and -3%.

A geographical analysis reveals stark disparities across the region. In the outer suburbs, prices have stabilized at approximately 3,220 euros per square meter, with a more tempered annual decrease of 4%. Conversely, the inner suburbs, which are in closer proximity to Paris, have recorded average daily rates of 4,940 euros per square meter, reflecting a decline of 5.5%.

Several explanatory factors underpin this situation, notably the accessibility of credit. Despite a slight improvement in mortgage rates—declining from 3.62% to 3.31% between December 2023 and September 2024—access to credit remains constrained. This development, while a glimmer of hope, has yet to mitigate the repercussions of prior rate hikes. Between January 2022 and January 2025, the purchasing power of households in the Île-de-France region is projected to diminish by 8.9% for apartments, effectively reducing the accessible surface area by 9.3 square meters, and by 10.2% for houses.

The prevailing uncertainty in the market has stymied first-time buyers and prompted sellers to postpone transactions, save for exigent circumstances such as divorces or inheritances. Young buyers have been particularly hard hit, with their share of transactions plummeting by 45% over the past two years. In contrast, retirees, exhibiting a remarkable resilience, continue to constitute a significant portion of sales.

Looking ahead to 2025, despite the myriad challenges, there are nascent signs of stabilization on the horizon. The ongoing price correction, coupled with a slight decline in rates, is anticipated to gradually enhance the solvency of households, potentially paving the way for a timid recovery in the market. However, one must remain vigilant, as economic uncertainties and restrictive tax policies—such as elevated transfer taxes—could dampen this nascent momentum.