Economy: Real Estate Prices Continue to Fall and Bankruptcies of Agencies are Skyrocketing in France!

Real estate, long seen as a safe haven in France, is now faltering under the weight of formidable economic and political forces. While sellers face a reality where prices continue to plummet, real estate agents see their future darkening at an alarming rate. This once-thriving market, which experienced years of uninterrupted expansion, is now going through an unprecedented crisis.

An inevitable but necessary decline according to Orpi

The French real estate market is going through an adjustment period that seems inevitable in the eyes of Guillaume Marinaud, president of the Orpi network. Interviewed by BFM Business, he states that property prices must continue to fall to allow for a resumption of transactions. This perspective is rooted in a market reality marked by a limited supply of goods and weak demand, exacerbated by the prevailing economic uncertainty. For Marinaud, the price correction, although it has already reached 7%, is still insufficient to revitalize a slowing market. “Prices will continue to fall, but slightly because we remain with supply tension,” he specified, emphasizing that this trend is essential to unlock sales and revive the market.

Despite the recent interest rate cuts initiated by the European Central Bank, the real estate market is struggling to regain its dynamism. Sellers, often reluctant to lower their prices, contribute to a form of inertia that hinders recovery. According to Marinaud, this price drop is not just a consequence of economic conditions but a sine qua non condition for transactions to resume at a normal pace. Despite these challenges, he remains optimistic about the market’s ability to stabilize, but only if sellers accept to lower their expectations, an adjustment that Orpi actively strives to promote with its clientele.

The wave of bankruptcies hitting real estate agencies

As prices continue to dip, the devastating effects of this crisis are not limited to mere market adjustments. The real estate sector is undergoing a real earthquake with an unprecedented wave of bankruptcies among professionals. According to the National Federation of Real Estate Agents (FNAIM), over 1,120 agencies have closed their doors in the past twelve months, a figure that represents a staggering 112% increase compared to the previous year. This phenomenon, which also affects independent commercial agents, reflects a disintegrating market, where the drop in transactions and banks’ reluctance to grant credit have pushed many players out. These closures are reminiscent of the dark hours of the 2008 subprime crisis but with an even more alarming scope.

Facing this hemorrhage, recovery prospects appear limited. The crisis seems to be settling in for the long haul, fueled by multiple and interconnected factors. Real estate agents, once the drivers of a thriving market, now find themselves navigating troubled waters, with some even opting for career changes. The cascading bankruptcies translate an implacable reality: the real estate sector, once a stronghold of stability, is now on its knees.

The French real estate market is undergoing a transformation, caught in a whirlwind of price drops and a series of bankruptcies. This crisis, far from being a mere parenthesis, could well redefine the sector’s contours for years to come. If signs of recovery may emerge, they remain contingent on a generalized acceptance of the need to adjust prices and on economic and political stabilization. The coming months will be decisive for the future of real estate in France, as the sector struggles to reinvent itself in the face of unprecedented challenges.