Could the French property slump be coming to an end in 2024?

French property market: 6 new trends highlighted by notaires

Notaires are hopeful the situation may soon improve... but for now, the market is still struggling

France’s property market could soon be exiting its slump, according to the latest data from notaires. 

The notaires, which release the most comprehensive set of data on the property market (as they cover all sales), published their new findings this week. 

You can read about changes in property prices highlighted by the data in this article:

Read more: MAP: see where house prices are rising and falling around France

Below, we cover six key trends highlighted in the new report.

1: Property market slump may soon be over... 

The current situation – falling prices and fewer sales – may be masking a quicker-than-expected turnaround and notaires are quietly hopeful that the market could begin to recover later this year.

A continuation of the conditions that began the downturn have masked an upturn in activity since the beginning of the spring, they say.

Spring is a traditionally busy season for the market but activity was stagnant in 2023, contributing significantly to the drop in overall sales that year.

2024 may be similar to the situation in 2022 but reversed. In 2022 many people did not predict the property market slump to begin that autumn, as it was performing strongly at the start of the year.

There is a warning, however, that a 2024 reversal is likely to be dependent on a continued fall in interest rates which will allow more buyers – particularly first time ones – to enter the market. 

2: ... but for now the downturn is in full swing

Even if the slump may turn out to be over sooner than expected, both prices and sales figures are still showing drops.

The new data shows that year-on-year prices (October/December 2022 to October/December 2023) have dropped across the board by nearly 7% in Paris (and nearly 4% across all of France).

The fall in the number of sales between February 2022 - February 2023 and February 2023 - February 2024 is the lowest ever recorded. 

Some cities saw prices drop by double digits in this period, with only a handful seeing rises. 

Sales concerned only 2.3% of the housing stock between February 2023 and February 2024, down from a record high during Covid, when 3.2% of all the stock switched hands in a 12-month period (August 2020 to August 2021). 

3. Flat prices drop except in south-east 

Flat prices, like house prices, have continued to fall although not as sharply.

Only one area (Lyon) saw prices fall by more than 10% between October/December 2022 and October/December 2023. 

In the south-east, an area prized for its climate, prices rose very slightly but outside of this they fell in almost all large French cities. 

Rennes (-7 %), Rouen (-5 %) and Nantes (-11 %) saw the biggest quarterly fall in flat prices at the end of 2023 (between September and December 2023).

Notaires predict, however, that for the worst-hit cities, prices will begin to flatten out, and will not drop as significantly in 2024. 

Read more: French towns take action to reduce percentage of second homes

4. New-build market still suffering 

The new-build market is still struggling to find its feet, with a number of issues prolonging a fall in construction permits. 

The number of permits to authorise new homes has dropped for seven consecutive quarters. 

Between March 2023 and February 2024, 364,800 permits were granted, more than 100,000 fewer than in the previous 12 months (a -21.8% drop).

It is not just representative of the end of a Covid boom – the number of permits authorised between March 2023 and February 2024 was 21% lower than in the 12 months preceding the first Covid lockdown (March 2019 to February 2020).

Detached houses are the hardest hit, with a 44.7% drop in permits for this type of construction.

Read more: Thousands of jobs lost as new building permits plummet in France

5. Mortgage rates fall by razor-thin amount 

Interest rates have fallen in France for the first time since January 2022, down from 4.17% to 4.11% 

Whilst this is only a small drop, it is an encouraging sign that it may soon be easier for people to access mortgages, and the European Central Bank is also looking to increase uptake to spur on property markets across the EU.

Outstanding home loans rose slightly compared to February 2023, showing more mortgages are being taken out, and again showing a return to a ‘normal’ market may be onits way.

This was also confirmed by the overall value of mortgage payments, which bucked recent trends by remaining stable. 

At the same time, 4.11% is still significantly higher than pre-Covid rates, which were below 2% between June 2016 and June 2021.

6: Purchasing power drop means smaller homes 

Lowered purchasing power has reduced the overall size of property people can afford to purchase by 25m² in the last 25 years, a study by national statistics body INSEE shows.

A lower purchasing power means less manoeuvrability to borrow for a mortgage, which results in a decreased property size for homeowners, who must settle for borrowing a smaller amount. 

Whilst this is not the lowest it has been in the time period – it fell further during the 2008 financial crisis – it has been in a sustained decline since 2017. Between 2022 and 2023 alone, it fell by 6m².