As we bid farewell to last year, we take a look back at the French Property Market Report from the previous year and anticipate what the year ahead holds in terms of buying and selling property across France.
Regarding the French Real Estate Market
Just like the rest of the world, the French real estate industry is now experiencing tough times. Here at Esales we’re still optimistic about the market’s ability to bounce back in the new year, especially because we’re hearing great things about what’s in store for British purchasers after Brexit.
Embracing 2024 with Optimism
A considerable slowdown has been observed in the housing market since 2022. A negative pricing cycle has been set in motion by interest rates nearly doubling in 18 months; however, loan rates are expected to begin stabilising in the first quarter of 2024.
As part of its stimulus package, the French government is relaxing lending standards at many banks in an effort to help families and first-time homebuyers. The construction industry has long pushed for these policies, and they will now come to fruition in the form of a much-needed infusion for the real estate market and French purchasers when interest rates are likely to fall early in the new year.
British Second-Home Owners: Do They Have an Automatic Visa?
A new immigration rule was enacted by the French parliament at the time this article was written, allowing non-resident Britons who own a second house in France to apply for a “automatic” visa. A number of French lawmakers are trying to make it simpler for British property owners to extend their stay in France.
Highlighting the contributions of UK residents to local communities, Senator Martine Berthet offered an amendment to extend the 90-day restriction. The Parisian Senate and National Assembly voted on December 19, 2023, to help British property owners cope with the difficulties they’ve had after Brexit by approving long-stay visas. If passed, the change would remove the 90-day restriction on travel inside the Schengen Area, allowing British property owners unlimited time in their French properties throughout the year.
While the year came to a positive close for British purchasers, the most recent developments after January 25, 2024, have effectively halted any further movement on this Brexit-related matter for the time being. Since the French Conseil Constitutionnel did not approve the change, it will not be a part of the final immigration bill. We will provide you with updates as the story progresses. Spain is keenly observing as well, due to the significant number of expats who live and work there, which has a positive impact on the local economy and tourism.
Sales and Prices on the Decline: A Market with Potential
A record-low in annual sales (approx. -21% to 875,000 sales) and falling property prices are expected outcomes of 2023. Since the French transaction market is now “on hold,” there are fewer homes available for rent and fewer properties for sale, which is good news for investors and buyers. Due to the high volume of daily inquiries, some Parisian rental companies have stopped posting new listings online.
French After rising continuously since 2015, property prices are starting to decline nationwide, with the Ile-de-France area seeing the most significant decline. Real estate in Corsica and the Provence-Alpes-Cote d’Azur region is going up, but medium-sized towns and rural regions are holding their own.
Quantitative Real Estate in France for 2023
Resale property prices fell 1.8% year-on-year in the third quarter of 2023, according to the Notaires-Insee index (November 2023). Home prices declined 1.0% (down from 1.3% before) and flat prices rose 0.5% (down from 2.8% previously) during the same time period, leading to this fall.
During the twelve months leading up to October 2023, the number of transactions reached 908,000, representing a 20% year-on-year reduction. It follows a period of consistent expansion in home prices that ended on December 1, 2023, with a 0.7% fall.
Paris Real Estate Market Values
The property and real estate values in the majority of French provinces and towns have fallen, just like in Paris. Along with eight of France’s ten biggest cities, the capital city had a 5.3% decline in property values over the course of a year. Two Occitanie cities, Nice and Montpellier, were an exception.
Prices in Paris are expected to decrease below €10,000/m2, marking an 8.6% decline since September 2020. In the Paris suburbs, too, prices have fallen significantly, falling 2.9%.
The CAC Attains Record-Highest Level
The CAC 40 index had a strong year-end performance on the back of falling inflation and the expectation of interest rate cuts in Q1 2024. On Tuesday, December 12, during the morning session, the main index of the Paris Stock Exchange hit a new all-time high, surpassing the 7582.47 point mark.
The CAC 40 has gained 16.53% since January 1 and recovered 11% from its October low. This is in stark contrast to 2022, when a number of factors—including the Ukrainian conflict, skyrocketing inflation, the oil crisis, and increasing interest rates—contributed to an 8.5% drop.
French Mortgages That Are Not Available
French mortgage standards have been more stringent than ever since the beginning of 2022, with borrowers allowed to borrow up to 35% of their income in repayments. Consideration of other mortgages, loans, and credit cards goes into this “taux d’usure” calculation, which is done before taxes.
Some purchasers have also sought out other loan sources due to the tightening of borrowing terms, which are now limited to a maximum of 25 years. Inquiring minds want to know if French mortgages are available to them. Our financial specialists will get in touch with you as soon as possible once you fill out the form to talk about your possibilities.
French Tourists Have Another Banner Year
As we’ve already discussed, waiting for the perfect time and conditions has been difficult for sellers and buyers alike over the last year. But there’s still a lot of interest in France.
The consistent demand from both local and foreign purchasers is a major reason why the French real estate market has remained relatively stable. In 2018, the nation was visited by around 90 million visitors. Following the Rugby World Cup, it is hastily getting ready to welcome 13.5 million spectators for the Olympic and Paralympic Games in 2020. Many people still consider France to be one of the best places in Europe to settle down or invest in real estate.
Working from Home, Gîtes, and Hybrid Jobs
A growing number of French businesses have adopted hybrid work models that allow employees to work remotely or from home in recent years. Home offices with high-speed internet have so become popular among young professionals and families. More people are likely to buy in rural and small town regions, particularly for income-generating properties like gîtes and B&Bs, because these places provide a better work-life balance.
