French Real Estate Market

Thinking about buying or selling French real estate? What can foreign purchasers anticipate in the next several months from the French real estate market, which underwent a lot of changes in 2022 due to increasing interest rates, tighter lending conditions, and the huge demand for rural homes driving prices up? Our expert forecasts for the 2023 French real estate market are as follows.

 

Are home prices about to drop?

According to Notaires de France-INSEE statistics, a slowdown in property prices had already begun by the fourth quarter of 2022. As of September 2022, the yearly number of sales reported by the Notaires de France was 1.1 million, down from 1.2 million in the same period in 2021. Despite this, the housing market remained active throughout the year. In the same year, 2022, home prices in France increased by an average of 8.6 percent, while flat prices increased by a more modest 4 percent.

The Fédération Nationale de l’Immobilier (FNAIM) forecasts that property prices will fall by an average of 5% in 2023. Prices in major cities like Paris, Lyon, Nantes, and Bordeaux have already started to plummet, suggesting that the rest of the country may follow suit. Prices for preexisting rural homes are anticipated to decline, although given the continued strong demand for such properties and the growing trend of French buyers looking to buy outside of major cities, a significant decline appears improbable.

This follows many years of skyrocketing prices; in France, both new and pre-existing homes have seen price increases of roughly 18% over the previous three years.

 

The housing market has not been affected by Brexit

Agents in France have said that in 2022, the most often asked question was, “Can I still move to France after Brexit?” (the response is “of course, and thousands are doing so right now!”). The agents tell us that after the pandemic and rising inflation, many British people are prioritising the purchase of an overseas property closer to home, so it’s unlikely that Brexit will slow down sales of French real estate to British buyers.

He predicts that the growing popularity of working from home will continue to increase the demand for second homes in the United Kingdom, where many people plan to spend part of each year working remotely. His advice: get the home’s internet speed checked before purchasing (and maybe check out our guide to fibre optics in France while you’re at it).

 

In France, mortgage restrictions have been tightened

While this is undoubtedly a favourable moment for cash purchasers in France, getting a French mortgage is still quite possible. Mortgage lenders are becoming more selective in who they lend to as interest rates continue to rise. Mortgage approvals dropped by 40% in October 2022 compared to September.

The Banque de France declared a maximum mortgage rate of 3.05% for loans of 20 years or longer in the third quarter of 2022, while the average rate was 1.45% in July ’22, up from 1.12% at the end of 2021. The increasing trend will likely continue through 2023, with rates expected to surpass the 4% level this year.

A minimum loan amount of €150,000 with a loan-to-value (LTV) of 80% is now typical for British buyers (equivalent to a minimum property purchase of €180,000 with a deposit of €30,000), while for US and other non-EU buyers (equivalent to a minimum deposit of €250,000 and a minimum property price of €500,000), the market has tightened even further.

Reports indicate that fewer mortgage loan applications are being granted than ever before, and qualifying standards are more stringent than ever before. Start by submitting an application for a mortgage loan on our website.

 

At present, selling property in France is advantageous

Even though there has been some discussion of dropping property prices and a potentially sluggish market, now is still an excellent time to sell in France, especially for rural homes. In fact, you may want to take advantage of the demand for rural purchases now if you are considering selling. The time to sell your French property has arrived, and we explain why in this post.

Tax increases for those with vacation homes

In France, rising energy prices and the taxe foncière on land and buildings will affect all property owners. In addition to the taxe foncière, second-home owners still have to pay the taxe d’habitation (which has been eliminated for all primary houses).

After the epidemic, a surge in demand for rural real estate led to a rise in prices, prompting authorities in several parts of France to look at discouraging the ownership of second houses. From 2023 forward, a number of additional regions will be added to the list of zones tendues, where authorities have the authority to increase taxe d’habitation by up to 60%

Agents suggest that if you own a vacation property in France, you “consider offering seasonal rentals” as a means of generating income. They can defray the expense of operation and yet leave you with enough for an occasional splurge.

 

Planning to make a 2023 purchase in France?

The French real estate market in 2023 is expected to be just as active as it has been in recent years. If you want to remain on top of it, there are three things you can do right now that won’t cost you a dime:

Watch the Market.

Read French Property Blogs.

Get advice from agents.