Unprecedented Decline in Sales and Prices
In 2023, the French real estate market saw an unprecedented 22% drop in sales, with only 875,000 transactions on existing properties. According to the National Federation of Real Estate (Fnaim), this is the largest drop in sales in 50 years. Furthermore, a decrease in property prices is expected in 2024.
This sharp deceleration is mainly due to the combined impact of inflation, rising interest rates, and increasing difficulties for buyers to access mortgage credit. Fnaim reveals that over the past two years, French people have lost 15% of their purchasing power for real estate.
Rapid Increase in Interest Rates: A Triggering Factor
The primary trigger behind this crisis has been the rapid increase in interest rates by -25% since January 2022, says Loïc Cantin, President of Fnaim. He predicts that the decline will continue into 2024, with sales potentially decreasing by around 10% to reach 800,000 transactions. However, even then, the turnover rate will still remain higher than what was observed during the eurozone crisis and the one in 2008.
Price Decreases Across Major Cities
Most regions across France, including major cities like Paris, are experiencing declines in property prices. In Paris itself, prices have fallen below €10k per square meter again, as well as in nearby suburbs. Fnaim anticipates a price decrease of -5 to -7% in 2024, which should correspond to the decline in volume – a classic real estate phenomenon.
What Does This Mean for Potential Buyers and Sellers?
For potential buyers, this could be an opportune time to enter the market as property prices are falling. However, it is essential also to consider the current economic climate, such as inflation rates and difficulties related to mortgage credits. Given these circumstances, it may be necessary to take extra precautions when looking for financing options.
On the other hand, sellers should keep in mind the projected decrease in both sales and prices for 2024. While it may seem like a challenging time to sell property, there may be opportunities to capitalize on the ongoing demand for real estate by presenting one’s property in the best light possible and being patient throughout the selling process.
Tips for Navigating The French Real Estate Market During These Challenging Times
- Stay informed: Make sure to constantly monitor market trends, interest rates, and economic developments that can affect your decision to buy or sell property.
- Seek professional advice: Don’t hesitate to consult with experienced realtors, financial advisors, or other experts who can help you make the best decisions during these uncertain times.
- Consider alternative financing options: If securing a mortgage proves difficult due to rising interest rates or tightened credit policies, research alternative ways to finance your property purchase, such as private loans or lease-to-own arrangements.
- Be flexible and patient: Whether buying or selling, flexibility and patience are crucial in navigating an unstable real estate market. Be open to adjusting your expectations and timelines accordingly.
Looking Ahead: A Changing Landscape for French Real Estate
As the French real estate market continues to face challenges with declining sales and prices, it is essential for buyers and sellers alike to stay well-informed and prepared. With an understanding of market trends, insightful advice from professionals, and a willingness to be flexible and patient during these challenging times, one can still find success within the French property market.
Note: This article offers a general overview of the current state of the French real estate market. We strongly advise that readers conduct their research related explicitly to their specific circumstances before making any decisions. For more personalized information and guidance, please consult a professional.
