The French real estate market is forecast to experience a mild downturn in 2026, marked by a slight decrease in property sales and stagnating home prices, according to a new report from leading French lender Groupe BPCE. This follows a period of recovery that started in early 2025 and is now losing momentum.
2025 Recovery Gives Way to Slowdown
After a brisk recovery in activity through spring 2025—driven by stabilized mortgage interest rates and a surge in loan production (+29% year-over-year)—the French real estate market’s growth is gradually slowing. Groupe BPCE’s data experts note that while the rebound was strong into April 2025, since then the pace of growth has noticeably softened.
“Growth continues, but at a weaker rate than earlier this year,” BPCE analysts observed.
2026: Slight Decline in Transactions and Flat Prices
Looking ahead, Groupe BPCE predicts that home sales (both new and existing properties) will decrease by about 2% compared to 2025 levels. The anticipated dip in transaction volumes is attributed to several factors, including:
- An uncertain economic and political climate,
- Rising unemployment,
- Weakened consumer and seller confidence due to ongoing geopolitical and fiscal challenges,
- And most notably, higher mortgage rates.
Mortgage Rates Set to Rise
The average housing loan rate is projected to reach 3.35% in 2026, up from 3.15% at the end of 2025. This uptick is driven by the stabilisation of the European Central Bank’s monetary policy and a forecasted increase in the 10-year OAT (French government bond rate), which is expected to nudge mortgage costs higher.
Property Prices to Remain Almost Flat
While France saw an average property price increase of 1% in 2025, the rate of growth is expected to slow further, with a marginal rise of just 0.7% forecast for the end of 2026. The combination of softer demand and higher financing costs appears to be keeping prices in check.
A Pause in the Upward Trend?
Many market experts are wondering whether the upturn in 2025 was a temporary blip rather than the start of a sustained boom. As borrowing becomes less affordable and economic uncertainty weighs on confidence, both buyers and sellers are likely to adopt a wait-and-see attitude, leading to a more subdued real estate market next year.
Key Takeaway for Buyers and Sellers
If you’re considering entering the French property market in 2026, expect fewer transactions, limited price gains, and higher borrowing costs compared to previous years. Experts recommend keeping a close eye on economic trends and mortgage rates before making major decisions.
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