France’s new home sales drop by nearly 9% in 2025 amid high rates, the end of the Pinel scheme, and a slowdown from public investors. Discover the main factors and potential solutions to revive the market.
The French real estate market is experiencing a sharp downturn, with new home sales taking a significant hit in 2025. Recent government data released by the Ministry of Spatial Planning, as reported by Franceinfo, confirm that new home reservations by individuals have dropped by nearly 9% year-on-year. This sobering statistic highlights a deepening housing crisis fueled by a combination of high borrowing rates, the end of key tax incentives, and waning interest from public investors.
Key Factors Behind the Decline in New Home Sales in France
1. High Interest Rates and Construction Costs
Even though real estate rates have seen a slight recent drop, they still remain historically high. Combined with soaring material prices, the cost of building new homes has increased, limiting the purchasing power of prospective buyers. As a result, demand is stalling despite a continued desire to purchase new property.
2. End of the Pinel Tax Scheme
The removal of the Pinel scheme in December 2024—a policy that previously incentivized rental investment through tax reductions—has further dampened buyer enthusiasm. Without these advantages, rental investors are less motivated to purchase new homes, directly impacting overall market activity.
3. Institutional Buyers Withdrawing
Institutional investors, including companies, social landlords, and local authorities, are also stepping back. Their collective reservations dropped to just 12,000 units in the second quarter, down 6.5% since the beginning of the year and a massive 25% decrease year-on-year. Political uncertainties ahead of the spring 2026 municipal elections add another layer of caution, discouraging new real estate projects.
Increasing Stock and Market Stagnation
As of June 2025, more than 120,000 newly constructed homes are standing vacant, waiting for buyers. This glut of unsold inventory underscores the severity of the crisis, with new apartment sales falling 2.5% from April to June and only a marginal 1% increase in single-family home sales, insufficient to offset the overall decline.
What the France’s Real Estate Market Needs
Industry professionals are calling for strong government action to reinvigorate new home sales in France. While interest rates need to fall further to improve affordability, experts also urge for renewed tax support, particularly for rental property investment, to entice both individual and institutional buyers back into the market.
The dramatic drop in new home sales signals a challenging period for France’s real estate sector. With declining demand, policy shifts, and cautious investors, a combination of lower interest rates and fresh tax initiatives seem crucial to reversing the current trend and restoring confidence to the market. Without swift intervention, the new housing crisis in France could deepen even further in the months ahead.
