The outlook for the French real estate market in 2026 is shaping up to be cautious, with the BPCE Observatory forecasting a slight contraction in housing transaction volumes and a moderation in price increases. According to new projections, ongoing uncertainty, rising interest rates, and a stagnating rental investment scene will all weigh on both buyers and sellers over the coming year.
Market Recovery Stalls Amid Uncertainty
After a surge in housing transactions in early 2025—spurred by pent-up demand and post-pandemic optimism—the French market experienced a noticeable slowdown. The political crisis in France, coupled with a more challenging economic environment, has dampened both buyer and seller confidence. As a result, BPCE expects the total number of housing sales (both new and existing) to decline slightly in 2026 compared to 2025.
The outlook for new construction remains especially bleak: the number of new home sales in 2025 is set to hit a record low for the third consecutive year, sitting nearly 30% below the average seen between 2018 and 2022. Without new incentives for rental investors, real estate development is likely to stagnate at these reduced levels, BPCE warns.
Mortgage Rates Set to Edge Higher
Adding to buyer concerns, mortgage interest rates are forecast to rise slightly in 2026. BPCE projects average borrowing rates of around 3.35%, compared to 3.15% in 2025. Although French banks are expected to shield first-time buyers somewhat from the full impact of rate hikes, the general upward trend will likely limit affordability and curb demand—especially in the existing homes market.
Rising unemployment and a tougher budget environment are expected to further weigh on market activity, keeping transaction volumes subdued. BPCE notes that these pressures are likely to overshadow any positive momentum, especially in the absence of fresh government support.
Slower Price Growth Ahead
For 2026, BPCE anticipates that home price growth will moderate even further, with prices in the existing homes market expected to rise by only 0.7%—down from 1% in 2025. These increases will lag behind inflation, meaning real prices could effectively stagnate or fall in many areas, particularly outside of France’s largest cities.
Rental Investment Remains Frozen
Rental investment in France is at a near-standstill. The latest BPCE-Audirep Savings & Investment survey (September 2025) reveals that more private landlords are looking to exit the market than enter it. Onerous taxation is the main culprit, even as some owners see real estate as a way to pass on wealth to future generations. Unless new legislative measures are introduced in the 2026 budget to improve the tax status of private landlords, BPCE expects this trend to continue.
A Market on Hold
The French real estate market in 2026 is expected to be defined by caution, modest price growth, and tighter lending conditions. For both buyers and sellers, the coming year looks likely to offer less activity, as higher borrowing costs and persistent uncertainty hold the market in check. Investors, meanwhile, await possible government moves that could spark renewed interest in rental property.
For now, France’s property sector appears set for a period of consolidation, where stability—not spectacular gains—will be the defining theme.
