The number of house sales in France is beginning to plateau after an extended period of steep growth, newly published data by France’s official network of notaires shows.
The report from the Notaires de France is the fullest property information available - taking into account all property sales and pre-sales that occur in France rather than data from individual estate agents.
With each notaire report taking months to compile, the latest data looks at the second quarter of 2022 - April 1 to June 30.
The report focuses on sales of logements anciens (non-new properties), which are usually homes that have been owned at least once.
France distinguishes between new houses and non-new houses, and while both have very specific definitions, they can generally be thought of as new-builds and second-hand houses.
Here are seven key takeaways from the latest update on France’s property market.
House sales slow down after an exceptional two years
Sales of non new-build houses in France have begun to plateau after an exceptional two years which saw a peak of 1.2 million sales between September 2020 and September 2021.
Despite the drop in sales (-3.7% in June and -5.6% in August year-on-year), numbers are still high and therefore could be interpreted as the market levelling out rather than declining.
The slow in sales has been particularly noticeable in September and October, according to notaires, although the final figures for these months are not yet available. Price rises have also stalled, although this has not yet translated into a fall in prices.
Overall, prices of existing housing stock in France have increased across the majority of the country over the past year, with only Caen and Nancy seeing small decreases.
In Dijon, for example, the average price of a non-new house increased by 12.6% to €280,000 between April and June 2022 compared to the same period last year.
However, it was Amiens that recorded the biggest rise, with prices increasing by a whopping 22.6% year-on-year. Despite this huge rise, the average price of a non-new house in the town remained around €190,000, making it one of the cheaper areas to buy in France.
Similarly, Châteauroux has seen prices rise by 17.2% compared with the same period last year, with average prices sitting at €136,000. Even with this explosion, average house prices in Chateauroux are the lowest of all the towns and cities highlighted in the report.
The steep increases in Amiens and Châteauroux come after a decline in prices in these areas in the first quarter of 2022 compared to the same period in 2021.
Sales are now taking longer to go through which is perhaps in part due to the slight drop in demand.
Notaires have noted that they are now seeing more negotiations taking place in comparison with a few months earlier.
With the market slowing down, people perhaps feel there is more time to negotiate a deal with less fear that the property will be snapped up quickly.
Taux d’usure often leads to contract signing delays
Another possible reason sales are taking longer is the taux d’usure (usury rate) - the maximum rate at which a loan can be granted, which takes into consideration the basic interest rate, as well as loan insurance payments and other fees.
The taux d’usure for the second quarter of 2022 was 2.4% for a fixed-rate mortgage over 20 years or more, but increased to 3.05% in October.
Mortgage rates meanwhile rose from 1.1% in January to 1.72% in September, implying a decrease in the amount homebuyers can borrow.
According to a survey conducted in the first half of October by France’s notaries, the usury rate is an issue that is likely to postpone signing the contract in 18.1% of appointments concerning real estate projects.
Moreover, in 19% of cases, the usury rate issue may lead to the completion of a sale being jeopardised.
New housing market in economic deadlock
While the non-new build market has been booming, the new housing market is not experiencing the same success, due in part to rising building costs linked to inflation, including to the price of raw materials.
The Zéro Artificialisation Nette policy, which seeks to limit building on natural or agricultural land, is also cited as a factor.
The reduction from 2023 in tax rebates on offer for buying a new house on the condition it is rented out at a controlled rate via the Pinel scheme is unlikely to remedy the situation.
Price of Parisian apartments remains steady
In Paris, apartment prices are expected to hover at €10,620 per m² in December, the same level as last year. This means that for a 50m² apartment, you can expect to pay around €531,000.
Outside of Paris, the average price of flats has risen much more year-on-year, with the greatest difference in Bourges, where prices were up 14.3% compared to the same period last year, at €1,480 per m².
