Experts assert the crisis is over, predicting a 2% rise in France real estate prices by 2025. Discover the insights driving this trend.
In a landscape characterized by economic upheaval, real estate professionals are tentatively optimistic, forecasting a 2% increase in property prices by 2025. The anticipated decline in inflation, coupled with decreasing borrowing rates, is expected to breathe new life into a sector that has, until recently, been enveloped in uncertainty.
The real estate market, having weathered a tumultuous two-year crisis marked by an astonishing 33% drop in transaction volume, appears poised for a resurgence. The year 2025 is projected to be the moment when French buyers once again venture into real estate agencies, eager to explore opportunities. Signs of recovery began to materialize towards the end of 2024, with the total number of transactions for the year surpassing initial forecasts. While the estimate had been set at 770,000—down from 900,000 in 2023—the actual figure approached 800,000, reflecting a modest recovery despite a dismal first quarter.
On the pricing front, a stabilization phase is already underway. According to SeLoger, property prices experienced a slight uptick of 0.4% from January 1 to December 31, 2024, largely driven by the rural segment, which saw an increase of 2.1%. In stark contrast, major urban centers exhibited price stabilization, with the top ten cities experiencing a marginal decline of -0.2% and the top fifty cities a decrease of -0.7%. Even Paris, after a significant price drop, has stabilized at -0.4%, with an average price of €9,355 per square meter. Notably, several large cities have reported monthly price increases, including Rennes (+0.3% to €3,774 per m²), Lyon (+0.4% to €4,362), Nice (+0.5% to €5,130), Strasbourg (+0.5% to €3,727), and Lille (+0.5% to €3,305).
This renewed optimism in the real estate sector may seem paradoxical, particularly in light of the prevailing political instability in France and a decline in household morale, as reported by INSEE last November. However, two pivotal factors lend credence to this recovery narrative. Firstly, the European Central Bank’s ongoing reduction of interest rates is expected to continue, with borrowing rates for 20-year mortgages now frequently dipping below 3.4%—a trend likely to persist. Secondly, inflation appears to be stabilizing below the 2% threshold, which not only enhances the real estate purchasing power of the French populace but also diminishes the allure of traditional savings accounts. The rate of return on the Livret A, which has reached unprecedented heights in recent years, is set to decrease to 2.5% on February 1.
Nevertheless, the horizon is not entirely devoid of clouds. The current political climate poses a potential threat, necessitating vigilance among stakeholders in the sector. Should the existing institutional crisis escalate into heightened tensions surrounding sovereign debt, the repercussions for housing demand could be significant. Budgetary constraints may ultimately undermine household solvency, casting a shadow over the anticipated recovery.