The French real estate market has experienced three very slow years, but that picture may change in the months to come.

According to market analysis by SeLoger and Meilleurs Agents real estate platforms in early September, there has been a 40 percent fall in property transactions since 2021, with demand to buy dropping by 14 percent in that period.  

The cost of living crisis and high interest rates were large contributors to the slowdown in France’s real estate market.

Economist Alexandre Verlhiac from Meilleurs Agents wrote in their early September analysis that the country is “at a turning point after three years of falling activity”. 

Despite hitting a low in August 2024, with just 756,000 properties sold, experts are hopeful that the market will see 771,000 sales by the end of the year. 

While this is still far from the number of ‘one million transactions’ which would be synonymous with ‘good turnover in the market’, it does show that the market may be picking back up.

In 2025, experts are hopeful that the country will see 900,000 transactions.

What’s changing?

The French property market has been struggling with a large stock of properties for sale, but little interest from buyers. 

Interest rates – For many would-be buyers, mortgages have remained inaccessible, due to high interest rates and strict loan requirements.

READ MORE: French property: How to get a mortgage in France

However, rates are dropping. In July the average rate was 3.63 percent, compared to 4.24 percent in December 2023. 

This decline in mortgage rates can be explained by the European Central Bank (ECB) opting to cut rates in June 2024. The ECB sets the tone, which signals for French banks to follow suit by allowing greater access to credit and lowering their own rates.

There is some evidence that this has already helped households access credit. Franceinfo reported that the number of loans approved in France jumped by almost 40 percent in the second quarter of 2024 in comparison to the first. 

There has also been some speculation that rates could fall to 3 percent by the end of the year.

Caroline Arnould, spokesperson for the mortgage broker Cafpi, told Le Parisien “Before the summer, I was leaning towards 3.3 percent at the end of the year, now I think we can go towards 3 percent.”

Others are not so optimistic – Sandrine Allonier, spokersperson for credit lender Vousfinancer, told Le Figaro that she expected rates would likely hit an average of 3.5 percent.

The next ECB meeting is expected to take place on September 12th, and experts anticipate a new drop in rates, close to 0.25 percent.

House prices – Experts also expect home prices to continue dropping until the end of the year and then to begin stabilising in 2025. However, they disagree on how much prices will continue to drop by.  Some experts believe more drastic decreases will be necessary to bring greater demand.

Meilleur Taux and SeLoger pointed to France seeing an average property price drop of 1.3 percent since September 2023, which is lower than the decrease seen between September 2022 and September 2023 (-1.7 percent), signalling that prices may be starting to balance out. 

Bordeaux and Toulouse saw decreases of 1.8 percent and 0.7 percent over the last year, and Paris, which had seen a 6.2 percent drop between September 2022 and 2023 saw an average decrease of 4.8 percent in the past year.

There are other factors to consider regarding house prices, and location makes a big difference, as well as the type of home (apartment or single-family house) and whether or not it is a new or old build. 

For example, at the end of May 2024, the property report by Notaires de France found that over one year, prices for old-build single-family homes in Grenoble remained stable, those in Nîmes increased in price, and those in Angers, Le Mans, Saint-Étienne, Saint-Nazaire, Valenciennes and Nantes decreased by about 10 percent. 

However, when it comes to new-builds, there have been other impediments including a decrease in the number of construction authorisations awarded.

Overall, a 2023 study by property listings website Bien’Ici found that prices have been falling the most in medium-sized towns and cities. Meanwhile, Meilleur Taux and SeLoger found that rural areas continued to resist trends of dropping prices, with a 1.2 percent year-on-year increase in September 2024.

Household purchasing power – Households lost a great deal of purchasing power between January 2022 and January 2024.

However, things could be looking up, in part due to salaries having risen due to inflation, which Pierre Chapon, co-founder of online broker Pretto, noted in Le Parisien.

Vice President of Data Analytics with SeLoger, Thomas Lefebvre, told BFMTV “we believe household purchasing power will hit 2022 levels again by spring time.”

When looking at the indicators, the average household in France, with a 20-year mortgage, would be able to afford a 68m2 home, according to Meilleur Taux and SeLoger. However, they expect that by 2025 this will increase by seven metres squared to 75m2.

So, is it a good time to buy?

Experts seem to think so.

“Prices will stabilise between now and the end of the year, interest rates will continue to fall and there is little competition in winter, which is traditionally a slow season, so yes, there will be a good buying window,” Thomas Lefebvre told Le Parisien.

“We won’t get back to the situation of 2020 and 2021, where interest rates were below one percent and we saw almost 1.2 million sales, but we’ve already hit rock bottom now. Everyone who has put off buying for the last three years is going to come back into the market,” Éric Allouche, head of the Era Group told Le Parisien.