House price falls accelerating in France: will this continue?

Property prices in France fell 7-8% year-on-year during the first six months of 2024, in a price drop acceleration that will please buyers but could worry sellers and estate agents.

Prices per metre square dropped 8%, the Foncia group has stated, while the Orpi group estimates a 7% drop for the same period.

“The fall has been accelerating for several months now,” said Jordan Frarier of Foncia, to Le Figaro. “And the trend is set to continue over the coming months.”

Read also: Where have property prices fallen the most in France? 

‘More favourable’ market

The drop has helped to ‘restart’ the market after a lull over the past few months, which has seen estate agents struggle to sell, and buyers struggle to get credit. Interest rates for property lending - which were at 1% over 20 years in 2021, peaked at 4.4% at the end of 2023. 

The Orpi group has even entitled its latest report: ‘Towards a Recovery Encouraged by Falling Prices (Vers une Reprise Encouragée par la Baisse des prix).

It comes after a challenging 2023, when the number of sales fell by almost 22% (to just over 875,000 nationwide). 

"We have been through 18 difficult months,” said Clément Delpirou, president of estate agents group IAD. “But the spring has been much more favourable."

Some estate agents reported a complete slowdown of the property market after President Emmanuel Macron called for snap elections last month, but the end of the election has reopened the market. 

“Buyers have already started work on their plans, and have approached their bank or broker, wanting to move quickly," said Mr Frarier.

Read also: Falling prices but not everywhere: a review of French property market 

Falling interest rates

Interest rates have now fallen to 3.7%, which has made it easier for buyers to get credit, prompting many to return to the market, with competitive and sometimes aggressive offers.

“When the price of a property is out of line with reality we see offers that are 10% to 15% lower right from the start," said Yann Jéhanno, president of Laforêt Immobilier. On average, the negotiating margin is around 5%, he said.

It is now a ‘buyers’ market’, said Mr Jéhanno, with sellers more willing to negotiate. 

"In the end, [sellers are] giving in, sometimes through education, sometimes after trying [and failing to sell] so realising that the buyers were not there. After years of frenzy, the market is finding a new equilibrium,” he said, in a new half-yearly report from the group.

Read also: Property in France: Buying power up slightly amid falling prices 

Which types of property are seeing the largest price drops? 

Detached houses with gardens, after prices for these soared during the Covid pandemic. 

Prices for these are falling more than for flats, at 6.8% compared to 1.7%, show figures from Laforêt. Only lower-priced properties are selling easily, said Brice Cardi of the L'Adresse group.

"Above €300,000, sales are more difficult to conclude,” he said.

Houses that need substantial renovations and environmental improvements are now also seen as a deterrent because of inflation, which has caused the price of such works to soar. 

"We see only half the number of clicks on ads for houses with a bad energy label, F or G," said Mr Cardi. 

These low ratings are also unattractive for people looking for buy-to-let properties too, as most homes with an energy performance rating of G and F will no longer be able to be rented from January 1, 2025 and 2028 respectively. Low ratings also equal higher heating bills, he said.