The French housing market is showing signs of recovery, albeit a cautious one, according to recent reports. Transaction volumes are increasing and buyer confidence is returning after a challenging period in and . However, the market remains below peak levels, and a supply bottleneck is emerging as sellers hesitate to list properties amid ongoing economic uncertainty.
The Notaires de France’s annual market report for indicates an expected 11% increase in transaction volumes, reaching approximately 920,000 to 940,000 sales by year-end. This rebound is largely attributed to the stabilization of interest rates around 3%, improving access to credit for potential homebuyers. While prices have remained relatively stable, existing apartments experienced a slight increase of 0.3% in the second quarter of , and resale homes have held steady.
“The French property market in late clearly reflects the broader economic caution we’ve observed throughout the year,” says Patrick Joseph, founder of My-French-House.com. “While demand is steady, what’s notable is the limited availability and choice this winter. Many sellers are holding back, waiting for clearer economic signals, which creates a supply bottleneck.”
This cautious optimism is echoed by data from the French Property Observatory (FPI), which has been tracking the new housing market since . The FPI’s own monitoring tool, developed for and by real estate professionals and recognized by public administration, relies on data from its Chambers of Observatory and provides a quarterly analysis of the new housing market in France. The tool has collected information on over half a million transactions to date.
The FPI Observatory’s scope extends beyond its members, aggregating data from all producers of collective and grouped individual housing in the territories observed. Its coverage rate has steadily increased, reaching approximately 90% of the metropolitan new housing market in (up from 80% in ).
However, not all segments of the land market are performing equally well. Savills France’s Q4 report on the development land market reveals increasing pressures and falling land values. Caution has persisted throughout the year, with weaker housing market fundamentals impacting decision-making across the housebuilding industry. Greenfield land values fell by an average of -1.4% in , with a more significant decline of -1.2% in the fourth quarter. Urban land values experienced even greater adjustments, falling by -4.5% annually, with a -1.7% drop in Q4.
The decline in land values coincides with a 0.6% increase in UK house prices over the course of , according to Nationwide. The slowdown at the end of the year was partly driven by uncertainty surrounding the Autumn Budget and speculation about potential changes to Capital Gains Tax. Weaker housing market conditions, with slowing sales rates, also reduced appetite for land.
SME developers are particularly concerned about commitments to existing sites, as slower delivery rates extend timeframes for servicing debt and hinder investment in new opportunities. There is less interest in smaller sites typically favored by these organizations.
Regional disparities are also evident, with the South East experiencing the most significant declines in land value. Greenfield land in the South East fell by -4.0%, while urban land declined by -5.2% in .
Looking ahead, Cushman & Wakefield’s Residential Forecast suggests continued challenges and opportunities for investors in the corporate real estate sector. While the report doesn’t provide specific details on the French market, it underscores the need for strategic decision-making in a complex environment.
The broader European B2C e-commerce market is also substantial, exceeding $1.5 trillion in , according to a recent report. While not directly related to the French property market, this indicates a strong consumer spending environment that could indirectly support housing demand.
The French property market’s recovery is therefore a nuanced picture. Stabilizing interest rates and increasing transaction volumes offer positive signs, but limited supply and regional variations in land values present ongoing challenges. The market’s future trajectory will likely depend on broader economic conditions and the willingness of sellers to re-enter the market.
