French Real Estate Market Stabilizes After Two-Year Decline

The French real estate market shows signs of stabilization, with prices in key regions either slowing their decline or beginning to rise.

The French real estate market has recently begun to show signs of stabilization after nearly two years of continuous decline. According to the latest data from notaires, the official public notaries in France who oversee property transactions, prices in various regions are either decreasing at a slower rate or starting to rise. This trend is particularly evident in cities located in central and eastern France, as well as in smaller coastal towns in the north and west. Notably, certain areas in the south of France are also experiencing price increases.

The data released by notaires is considered the most reliable source of information regarding property sales in France, as they handle all transactions involving non-new build properties, which include both flats and houses. The quarterly reports provide insights into sales trends dating back to two quarters prior to publication. The most recent findings indicate that the period between the final quarter of 2023 and the first quarter of 2024 saw only a minor quarterly drop in prices, suggesting a potential turning point for the market.

Market Trends and Projections

The notaires' preliminary data, which covers transactions up to early August 2024, is being utilized to forecast upcoming market trends. Analysts believe that September could be a crucial month for the French real estate market. A lack of incentives for buyers may lead to another decline in prices, potentially causing a slump in the market. However, the easing of price falls offers a glimmer of hope for sellers who have been grappling with a challenging market.

Despite the overall downward trend in property prices over the past two years, recent indicators suggest that this decline may be slowing. The year-on-year change in prices for non-new-build properties fell for the third consecutive quarter in early 2024. Specifically, property prices experienced a 5.2% decrease in the first quarter of 2023-2024 compared to the previous year. However, projections indicate that the pace of decline is expected to ease, with a forecasted 4.8% drop year-on-year by August 2024. The national price drop for all types of properties in the first quarter of 2024, compared to the final quarter of 2023, was recorded at 1.6%, further confirming a general slowdown in falling prices.

Regional Variations in Property Prices

Interestingly, while some areas are experiencing price increases, others, particularly larger cities like Paris, are still facing significant declines. Coastal towns and resorts that are popular with second-home buyers are continuing to resist the downward trend. Notable locations in the north and west of France, such as Dunkirk, Dieppe, Saint-Malo, Pornic, Trouville-sur-Mer, and Cherbourg, reported increases in sale prices in March 2024 compared to March 2023.

Although the data for more recent months remains preliminary and is not yet broken down for all cities, several locations have been confirmed to see year-on-year price rises as of January 2024. Among these, Nice stands out as the largest city to record an increase, with the price per square meter of flats rising by 1%. Other cities, including Corse-du-Sud, Bourges, Strasbourg, and Amiens, also saw increases in flat prices. Additionally, house prices in cities such as Chartres, Orléans, and Dijon have shown positive trends, with Montauban in the south recording the largest increase in mainland France at 4.6%. The island of Guadeloupe has seen even more dramatic changes, with house prices soaring by 16% during the same period.

Key Factors Influencing the Market

The notaires have outlined ten critical factors—financial, legal, and technical—that they believe will play a significant role in strengthening the market and facilitating its recovery. These factors are essential for potential buyers and sellers to consider as they navigate the evolving landscape of the French property market.

One of the pivotal changes influencing the market is the European Central Bank's (ECB) decision to cut interest rates in June 2024, following a prolonged period of stability. This reduction, prompted by a decrease in inflation, has had a positive impact on the property sector. Analysts suggest that further or sustained drops in interest rates could reignite demand in the housing market. However, the ECB is expected to maintain a cautious approach regarding additional rate cuts for the remainder of the year.

Moreover, the political instability following the recent French elections, coupled with the ongoing lack of a feasible majority in the Assemblée nationale, is anticipated to exert a negative influence on the property market. The uncertainty surrounding political decisions may lead to stagnation in the sector, causing prices to either plateau or decline further. Homeowners eager to sell may find themselves compelled to lower their asking prices, which could deter potential buyers and hinder market recovery.

Looking Ahead: What to Expect This Autumn

As the autumn season approaches, the outlook for the French real estate market remains uncertain. The interplay of interest rates, political dynamics, and buyer sentiment will be crucial in determining the direction of property prices. While some regions are witnessing price increases, the overall market sentiment is tempered by the potential for further declines, particularly in larger urban centers.

The French real estate market is at a crossroads, with signs of stabilization emerging after a prolonged period of decline. While certain areas are experiencing price increases, the overall trend remains cautious, influenced by external economic factors and political uncertainties. As stakeholders in the market prepare for the upcoming months, the focus will be on navigating these challenges and seizing opportunities for growth.