A significant drop in value of homes in many areas of France can be seen in the French notaires’ latest quarterly report on the housing market
The report mainly details information on housing prices and the number of sales of non-new build houses but also includes information on mortgage rates and building permits and other points.
It is seen as the most accurate portrayal of the French property market as it includes data from every single sale (with the exception of certain overseas territories).
We look at seven key trends picked up from the latest set of data, which was released last week.
Note that due to the time it takes to compile this data, most of the information in the report runs only to July or August, 2023. In some cases trends and predictions from preliminary data up to the current period are used.
Fall in number of sales continues
The number of non new-build properties sold between August 2022 and August 2023 fell to 955,000, continuing the trend of a drop in sales.
This is almost 300,000 fewer than at the peak of August 2021 (1.2 million homes were sold between August 2020 and August 2021) and is a ten-year low, which the notaires say is a “brutal” shift.
Whilst not as low as immediately following the 2008 financial crisis (where year-on-year house sales were around 650,000), the continued fall indicates a shift in the market that had been on the rise for almost ten years.
“The year is likely to end at around 900,000 transactions, a sign of a sharp year-on-year slowdown, combining inflation, high interest rates and the end of [Covid-based property] euphoria,” the notaires’ report states.
House prices set to fall nationally
Despite a very small year-on-year increase in property prices outside of the capital region, another quarterly fall in the level means a year-on-year drop in house prices is not far off.
The annual increase in prices between August 2022 and August 2023 was 0.5%, compared to 2.7% in May 2022-2023, and almost 5% in March 2022-2023.
The final set of data for 2023 which will be released in the first / second quarter of 2024 is highly expected to show a year-on-year drop in prices, confirming the market slump.
Non new-build homes are slightly less affected than their flat counterparts, seeing a year-on-year rise of 0.9% compared to no change (0.0% year-on-year for flats).
Paris continues to see price drops
Paris and the surrounding area has been hit particularly hard.
The capital region (Île-de-France) has seen property prices falling for a long time, and the year-on-year drop in value for all properties combined is now 3.1% (up to 3.7% for houses).
The price per m² in Paris itself (i.e inside one of its 20 arrondissements) is €9,940, with notaires confirming the fall below the symbolic €10,000m² mark happened at some point after July this year.
Regional differences show across France
Elsewhere in France, “sharp annual [year-on-year] drops” in house prices of at least 8% in Amiens, Orléans, Nîmes, Saint-Étienne, Valence, Lyon and Toulon are expected by the end of 2023.
Other cities such as Le Havre, Maubeuge, Rennes, Valenciennes, La Rochelle, Toulouse, Le Mans, Grenoble and Lille are expected to see values fall between 3% and 6%.
Year-on-year differences based on the second trimester of 2023 (which are included in last week’s report) show less drastic changes, but bar a couple of cities, almost all areas show only a very small year-on-year price rise, or an overall price drop.
Year-on-year declines in the value of flats could reach up to 8% in Besançon, Mulhouse, Nantes, Angers and Rouen by the end of 2023.
Prices in Lille, Toulon, and Marseille are expected to remain stable.
First-time buyers still adrift, rental market shrinking
The property slump is still affecting-first time buyers the hardest as they struggle to obtain a mortgage and / or deal with rising inflation.
They are not helped by the reluctance of sellers to lower prices below their asking initial asking value. Further falls in value (but an overall rise in the number of homes sold) are expected once sellers accept lower prices in a “reconfigured” 2024 market.
In turn the lack of first-time buyers leaving the rental market, and an overall decrease in the number of properties on the rental market, is squeezing the sector hard.
Glimmers of hope in the new-build market
The new-build market has also suffered from the economic conditions of rising inflation, cost of raw materials, and a lack of potential buyers.
The number of new homes being constructed has fallen by over 13% in the last three months for shared complexes (blocks of flats etc), and almost 7% for single-home units.
The expansion of the PTZ (an interest-free loan) for new homes has sparked some positivity although the notaires note that the “scope of application [of the loan] is far from enough [to reverse the trend] in the building industry.”
The number of reservations for a new-build home has dropped nearly 40% in the last 12 months.
Mortgage debt decreases, signalling a lack of new borrowers
France’s mortgage debt fell to €9.9 billion in August 2023 (it was €10.1 billion in July), signalling a lack of new mortgages.
The average mortgage rate stood at 3.62% in August 2023, which, despite hand-wringing by a number of French analysts, is “lower than in most major eurozone countries”.