Is french property slump ending? : key points in latest notaire review

The property market slump in France is ending, predict notaires in their latest analysis of the market. Notaires release a quarterly report on the market in France, the most in-depth

available as it contains information on all sales of non-new build properties in the country.  Due to the time it takes to compile, full data is only released for two quarters prior to

publication (the most recent report contains full sales data up to September 30, 2024). However, it also contains preliminary data , used to predict the current state of the market and

expected trends over the coming quarter. Notaires believe that whilst the market slump is ending, political instability is leading people in France to feel less confident about the sector,

which may cause hesitation in would-be purchasers and slow the expected recovery. Below, we cover five key points from the data. 1: END OF PROPERTY MARKET SLUMP IN SIGHT The post-Covid slump

seems nearer to its end after more than two years, with numerous signs the market is recovering.  Chief among these is a slowdown in the year-on-year drop in property sales in France.

Although annual numbers remain low – 778,000 properties sold between November 2023 and November 2024, compared to 872,000 between December 2022 and December 2023 – they are recovering

compared to the peak of the crash.  The figures show a -12% drop in sales between November 2023/2024 and November 2022/2023. However in February 2024, this year-on-year drop was above -20%.

  These rates have been improving for a number of months (since May 2024), and notaires believe year-on-year sales figures should soon begin to stabilise. Other positive points include

“prices on the mend, the fall in interest rates… falling overall inflation in both the Eurozone and France,” all of which “are restoring purchasing power to the French who had abandoned the

market in an overly constrained environment.”  Notaires warn however that for now the recovery remains erratic and is not widespread across all sections of the market nor geographically

across France. 2: PROPERTY PRICES SLOWLY RECOVERING  Year-on-year property prices began rising in some cities across France in the third quarter of 2024. The increases included Normandy,

Corsica, and Nouvelle-Aquitaine.  Cities that have been seeing prices fall during the crisis – most notably Nantes – are still seeing year-on-year prices drop, but not as dramatically as at

the beginning of the year, giving hope that they will soon begin to stabilise.  Read more: French house prices 2024: how did your area fare in new notaire data? Data covering the third

quarter of 2024 showed some positive signs for house prices, which essentially remained flat across the three months, compared to a year-on-year drop of around -4% between Q3 2023 and Q3

2024. The predicted year-on-year drop in property prices (flats and houses) to February 2025 (full data to be released around summer 2025) is expected to be around -0.7%, with prices at the

end of 2024 and beginning of 2025 rising across the country. 3: SUSTAINED HOUSE PRICE INCREASE AROUND PARIS, FLAT PRICES LEVEL OUT NATIONWIDE A volatile region, property prices in the

Île-de-France are among the first to see sustained price increases over the last months for which full data is available.  Suffering a harder drop in house prices than the rest of France –

-5.3% year-on-year in September 2023/2024 compared to an average -3.9% elsewhere – the region saw growth in house prices of +0.4% only taking into account the third quarter of 2024 alone.

This is compared to prices in the rest of France, which fell by -0.2% during this time.  The prices for flats fell -0.3% during the same quarter in the region. Outside of the region flat

prices remained unchanged for the quarter. Year-on-year changes in prices between Q3 2023 and Q3 2024 showed a -3% fall. The price per m² for all property in Paris is expected to be around

€9,420 in February 2025.  Significantly lower than the previous €10,000 per m² benchmark, the-year on-year decrease however will be less than -2%, compared to that to February 2024 when it

was -7.7%.  Read more: Paris joins Marseille in banning key boxes in bid to stop illegal tourist lets 4: A STABILISATION OF MORTGAGE RATES  Mortgage rates for property purchases in France

continued to fall, reaching an average of 3.38% in November 2024.  This is significantly lower than the January 2024 peak of 4.17%, but notaires are unsure if rates will continue to drop to

pre-Covid levels (closer to 1%).  The lower inflation rates expected in 2025 may help to lower the rates further, but the European Central Bank may not choose to cut its interest rates this

year, which could negatively impact mortgage rates, and see them stagnate.  One positive however is that the banks are not close to limits on mortgages for borrowers who do not meet the

criteria usually required to be accepted.  Generally, banks can only lend to prospective buyers if they fulfil certain criteria including having monthly funds above a certain level

(determined by the mortgage rate).  To spur the market, however, the government allows banks to eschew these rules in up to 20% of cases for would-be borrowers who are otherwise close to the

limits. Banks are currently levying these flexibility rules for around 15% of mortgages, meaning there is room to encourage more purchasers if mortgage rates do not change. Read more: Is it

right time to renegotiate mortgage on French home? 5: NEW-BUILD MARKET OUTLOOK REMAINS BLEAK The number of new-build properties authorised in France is continuing to fall.  The number of

new build units authorised in November 2024 was 26,900, -5.7% compared to the month before.  Between December 2023 and November 2024 330,900 homes were authorised for construction. This is

44,900 fewer than in the previous 12 months (-11.9%) and -28% fewer than in the 12 months before the Covid pandemic. (March 2019 to February 2020).  Sales figures of new-builds are down -30%

year-year between Q3 2023 and Q3 2024, however the number of reservations for new-build properties is up +5.8% in the same time.  You can find the full set of data from the notaires here.