The real estate sector is at half-mast. After two years of surge, real estate prices are expected to continue to fall in 2024. Indeed, in 2023, the market recorded a "historic" drop of 22% in sales of second-hand homes. This is the worst decline in property sales in fifty years and the decline is expected to continue in 2024, which should translate into lower prices in 2024.
Aspiring homeowners have given up on buying this year due to the combined effects of inflation, rising interest rates and difficulties in accessing home loans, explains the National Real Estate Federation (Fnaim), which publishes figures on Tuesday. The French have lost "15% of their real estate purchasing power in two years," the organization said. "Borrowing capacity (is) down 25% since January 2022," Fnaim president Loïc Cantin told reporters.
Over the last twelve months, price decreases have already been recorded, particularly in Paris and its suburbs, where prices have decreased by -5.7% and -3.6% respectively. In most of the large provincial cities, prices fell only moderately (-2.6%), as in the rest of the country (-1%). The only exceptions are the prices observed in ski and seaside resorts that are rising, as well as on the Mediterranean coast and in Corsica.
Acquisitions made in 2023 are "overwhelmingly intended for primary residences," according to Century 21, while purchases made for rental investment are falling. However, the drop in sales is not considered alarming by the sector, which sees it as a return to normality. In fact, prices had been rising steadily since 2009.
Bottlenecking of the rental supply
"The positive thing about 2023 is that it has come to a standstill, which means that the real estate craze that has gripped the market for the past two or three years with Covid is slowing down," says Guillaume Martinaud, president of the Orpi agency network. With 875,000 sales in 2023, "we are far from the disaster we experienced in 1992 with 500,000 transactions," he continues, judging that the market "is becoming reasonable again" and could "unwind in 2024 since there is still as much demand."
However, Fnaim paints a particularly gloomy picture of the rental market. Unable to buy, aspiring homeowners continue to rent out their primary residence. "There is a total strangulation of the rental supply in all French territories," said Loïc Cantin, referring to students who are staying with their parents, and companies "forced to build housing as close as possible to their place of production".
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While the supply of sales has increased by 33% in five years, the rental supply has fallen by 59%, with some owners being more cautious about renting since the entry into force of the obligation to renovate homes with energy efficiency.