Economy: The French Real Estate Market is in Turmoil

The French real estate sector is going through a major crisis, surpassing the darkest scenarios. The latest statistics from Notaires de France reveal a sharp slowdown in transactions and a general devaluation of real estate assets.

Historical Decline in Sales

The volume of real estate transactions is collapsing. With only 793,000 sales of old homes in the last twelve months ending in May 2024, there is a decrease of 22.6% compared to the previous year. The market has not seen such a level since December 2015.

Edouard Grimond, spokesperson for the Superior Notarial Council, expresses his concern: “We anticipated a decline in sales, but not to such an extent“. The forecasts for the end of the summer are even more alarming, with a risk of falling below the 750,000 annual transactions mark.

This downfall is explained by several factors:

• Tightening of mortgage lending conditions
• Unstable economic conditions and persistent inflation
• Decline in household purchasing power
• Political uncertainty following the dissolution of the National Assembly

Generalized Depreciation of Real Estate

The decline in prices is increasing across the entire territory. In the first quarter of 2024, old homes lost 5.2% of their value over a year in mainland France, affecting both apartments (-5.5%) and houses (-4.9%).

The Île-de-France region is particularly affected with a drop of 8.1% over a year. In Paris, the average price per square meter fell to €9,490, a decline of 7.9%.

Projections for the end of August 2024 predict a stabilization of the decline around -4.8% over a year. However, some metropolises such as Lyon, Nantes, or Tours have already recorded declines exceeding 10% for apartments.

The new construction sector is not spared. Housing starts and building permits show respective decreases of 21.5% and 15% over a year. New home sales and reservations are also collapsing by 38% and 25%.

This unprecedented real estate crisis raises many questions about the future of the sector and its repercussions on the French economy. The start of September 2024 will be decisive in determining whether the market can rebound or if the downward trend will continue.