The French real estate sector is going through a major crisis, surpassing the darkest scenarios. The latest statistics from the Notaries of France reveal a sharp slowdown in transactions and a general devaluation of real estate.
Historic drop in sales
The volume of real estate transactions is collapsing. With only 793,000 sales of existing homes over the last twelve months to the end of May 2024, there is a decrease of 22.6% compared to the previous year. The market had not seen such a level since December 2015.
Edouard Grimond, spokesperson for the Higher Council of Notaries, Express his concern: ” We expected a drop in sales, but not of this magnitude.“The forecasts for the end of the summer are even more alarming, with a risk of falling below the 750,000 annual transactions mark.
This decline can be explained by several factors:
- Tightening of the conditions for granting real estate loans
- Unstable economic situation and persistent inflation
- Erosion of household purchasing power
- Political uncertainty following the dissolution of the National Assembly
Widespread depreciation of real estate
The drop in prices is increasing across the country. In the first quarter of 2024, old housing lost 5.2% of its value over one year in metropolitan France, affecting both apartments (-5.5%) and houses (-4.9%).
The Île-de-France region is particularly affected with a fall of 8.1% over one year. In Paris, the average price per square meter fell to €9,490, a decline of 7.9%.
Projections for the end of August 2024 predict a stabilisation of the decline at around -4.8% over one year. However, some metropolises such as Lyon, Nantes or Tours have already recorded declines of more than 10% for apartments.
The new construction sector has not been spared. Construction starts and building permits have shown respective declines of 21.5% and 15% over one year. Sales and reservations of new homes have also collapsed by 38% and 25%.
This unprecedented real estate crisis raises many questions about the future of the sector and its repercussions on the French economy. The start of the school year in September 2024 will be decisive in determining whether the market can rebound or whether the downward trend will continue.
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