A new study reveals that French household wealth fell 0.9% in 2023, totaling €14.567 billion, marking a second consecutive year of decline.
In the realm of real estate, the year 2023 has proven to be a rather tumultuous one for French wealth, as evidenced by a recent study conducted by INSEE and the Banque de France. The findings, published on a rather unassuming Wednesday, reveal that the wealth of French households has experienced a decline for the second consecutive year, a trend that may leave many scratching their heads in bewilderment.
As of the close of 2023, the aggregate wealth of French households stood at a staggering €14.567 billion, reflecting a decrease of 0.9% compared to the previous year. This follows a minuscule dip of 0.1% in 2022, marking a significant departure from the eight-year streak of uninterrupted growth that had previously characterized the French economic landscape. The primary culprit behind this contraction in wealth appears to be the plummeting property prices, which have seen a disconcerting decline of 4.7%.
Interestingly, while household wealth has taken a hit, corporate wealth has plummeted even more dramatically, with non-financial corporations witnessing a staggering 10% reduction in value over the course of the year. This decline can be attributed to a dual phenomenon: the falling land prices and the escalating financial liabilities that have beset these entities. Meanwhile, the wealth of the general government has not fared much better, suffering a sharp decline of 27.5%. However, it is worth noting that this figure still surpasses the levels recorded in 2021, thanks to a significant uptick in 2022.
When one aggregates these various assets, the overall national wealth has contracted by 4.2% in 2023, marking the first such decline since 2014—a rather sobering statistic for policymakers and economists alike. As we venture into 2024, property prices have continued their downward trajectory during the initial two quarters, only to show signs of stabilization in the third quarter, as indicated by the Notaires-INSEE reference index released at the end of November.
The European Central Bank’s decision to initiate rate cuts in early June, following a notable deceleration in inflation, has been heralded as a potential catalyst for a market recovery. Yet, despite this glimmer of hope, prospective buyers remain in a state of cautious anticipation, leading to a continued decline in transaction volumes during the third quarter. It appears that the real estate market is caught in a perplexing dance of uncertainty, leaving many to ponder the implications of these economic shifts on the broader landscape of French wealth.
