France’s property market saw its greatest year on year drop in sales in 50 years in 2023, newly released data shows.
Only 875,000 non new-build houses were sold during the year, said the Fédération Nationale de l'Immobilier (Fnaim), France’s leading union of estate agents, in its 2023 report.
This is a 22% drop from the 1,115,000 recorded in 2022, and is the sharpest year-on-year drop for at least half a century.
The “extremely brutal” decline is due to “the combined effect of inflation, rising interest rates and increasingly difficult access to mortgages,” said Fnaim president, Loïc Cantin.
“The French have lost 15% of their purchasing power in two years,” the report adds, another contributing factor, particularly for first-time buyers.
Further fall in property sales predicted for 2024
The number of home sales first fell between 2021 and 2022, following a boom during the first period of the Covid-19 crisis, when sales reached a high of 1,207,000 homes between August 2020 and August 2021.
This was followed by a more severe drop in 2023, which coincided with a seven-year low in overall property sales.
Annual property sales have been significantly lower than 875,000 before, particularly during the 2008 financial crisis, however such a sharp year-on-year decline was not seen.
Mr Cantin believes that property sales will continue to fall throughout 2024.
He predicts a further fall of around 10%, bringing the number of homes sold throughout the year to under 800,000.
A figure this low was last seen in 2015.
There is slight variation in areas where sales have dropped the most, however every single department on mainland France and Corsica saw sales numbers drop.
Many in the north and west have seen falls of between 15% and 30%.
All others saw sales fall by between 7% and 15%, with the sole exception of Ardennes, where they dropped between 3% and 7%.
Data on property sales collated by French notaires is due to be released within the next few weeks, and will give further insight into drop.
Their information will cover the third quarter of 2023, but is the most complete data set as it contains all home sales nationwide.
What about property prices?
Predictions have already been made that prices will need to drop – by up to 5% – to kickstart the market.
The Fnaim report points towards the falling prices during 2023, and says the trend will continue into 2024.
Prices fell almost everywhere in 2023 with the exception of “the Mediterranean coast, other parts of the south and Corsica.”
Local prices here rose by between 1% and 3%.
“The declines observed in the most expensive major cities are set to continue,” says the Fnaim report.
What are the other predictions for 2024?
The Fnaim predicts that the expected stabilisation of mortgage rates at around 4% will encourage more people to purchase property.
Small changes to mortgage rules, including the expansion of mortgages lasting more than 25 years, may also help.
This will not be enough, however, to reverse the trends that began last year.
“2024 will be a year of transition for the real estate market,” said Mr Cantin.
“Prevented from completing their real estate projects by the increase in interest rates and the persistently high prices, the French will continue to find it difficult to bring their plans to fruition.”
However he added, “the end of the rise in borrowing rates and the fall in prices should give households back their purchasing power.”
This should equate to an increase in the number of properties sold from 2025 onwards, leading the market into another period of growth.