The French property market, after enduring a prolonged period of decline, is showing signs of stabilization. While sales figures remain subdued and prices continue to adjust, the rate of decline in both has significantly slowed, suggesting a potential turning point. This sentiment is echoed in the latest report from the Notaires de France, a collective representing all notaries in the country.
The report, a comprehensive analysis of the French property market, provides invaluable insights into trends, including sales volumes, price fluctuations, mortgage rates, and new construction. While the data reflects conditions up to June 2024, it offers valuable insights into the market’s trajectory.
A Cautious Optimism Amidst Falling Sales:
The report reveals a continued decline in sales volume, with 780,000 properties sold between August 2023 and August 2024. This marks a significant drop from the peak observed in 2020-2021 when over 1.2 million properties were sold annually. However, a crucial shift is evident. Year-on-year sales declines in July and August 2024 moderated below 20%, a trend not observed since autumn 2023. This deceleration suggests a potential stabilization of the market after a prolonged downturn.
The Notaires de France expressed cautious optimism, attributing this trend to several factors. The European Central Bank’s interest rate cuts and the expansion of zero-interest home loan programs are expected to stimulate mortgage demand and fuel a market upturn. Furthermore, while confidence in the housing market remains subdued, it has shown signs of gradual improvement in recent months, according to INSEE, the French national statistics body.
Price Drops Slow Down, but Regional Variations Persist:
While house prices experienced a widespread decline across most of France, the rate of decline has noticeably slowed. Between the first and second quarters of 2024, prices for all non-new-build properties fell by a modest -0.5%, a significant improvement compared to the -1.6% decline observed in the previous quarter.
Regional variations in price performance remain pronounced. While some areas, particularly in the north-west, continue to experience significant price drops, many regions have witnessed a stabilization in prices. Notably, tourist destinations, which bucked the downward trend during the initial stages of the market slowdown, have maintained relative price stability.
Paris: A Tale of Two Markets:
The Paris region presents a unique picture. While prices have experienced a more pronounced decline in the capital and its surrounding areas, the rate of decline has shown signs of moderation. Year-on-year price falls in Île-de-France reached -7.2% in the second quarter of 2024, but this figure is expected to decline further in the coming months.
The market for apartments within the city of Paris appears to be stabilizing, with price per square meter currently hovering around €9,430. While this remains significantly higher than the national average, it represents a notable decrease from pre-slump levels.
Shifting Demographics: Elderly Sellers Drive Market Activity:
A significant shift in the seller demographic is evident. The proportion of elderly sellers (aged 60+) has increased markedly, now accounting for 56% of all sales, a 4% increase since the beginning of 2024. This trend is particularly pronounced among those aged 70 and above, who now constitute one-third of all sellers.
Conversely, the proportion of younger sellers (aged 30 and under) remains relatively low, accounting for only 2% of all sales. This demographic shift has implications for market dynamics, influencing demand patterns and potentially impacting the availability of affordable housing for younger generations.
Mortgage Market Recovers as Interest Rates Decline:
The mortgage market has shown signs of recovery, with outstanding mortgage loans increasing from a low of €6.9 billion in March 2024 to €9.8 billion in August 2024. This rebound reflects a decline in interest rates, which fell below 3.6% in August 2024, marking an eighth consecutive month of decline.
While banks adhere to strict lending criteria, the current utilization rate of discretionary lending limits is relatively low, suggesting a cautious but confident approach by lenders. This cautious optimism is further supported by the gradual stabilization of the property market.
The French property market, after a period of significant turbulence, appears to be entering a phase of stabilization. While challenges remain, the deceleration of price declines and the gradual recovery of the mortgage market offer a glimmer of hope for a more balanced market in the near future. However, the long-term outlook will depend on a confluence of factors, including economic growth, interest rate trends, and evolving consumer confidence.
