Investments: real estate prices in France are starting to decline.

The rise in interest rates is excluding many potential buyers, particularly first-time buyers, from the market. The trend is more specific to large cities, especially Paris and its environs.

Published: 13.04.2023, 16:02

Paris and its environs have recorded a significant decline in real estate prices over the past two years. Property values are starting to decline in major cities and even nationally, according to some real estate agents, due to the greatly reduced availability of credit.

According to the barometer of the National Real Estate Federation (Fnaim), which takes into account data from its members as well as data from online portals, prices per square meter of older properties have increased by 4.5% compared to the first quarter of 2022.

For some chains, however, prices per square meter just started to decline nationally, dropping 1% in the first quarter, according to Orpi and Laforet.

They have fallen especially in major metropolitan areas: eight of the ten largest French cities, according to Orpi, show a decline in prices, the exceptions being Marseille and Nice.

In smaller cities, however, prices continue to rise, with Orpi also noting significant increases in Vichy, Bourges and Caen.

Prices also continue to fall in Paris, a trend that began two years ago, as well as in its suburbs.

Prices also continue to fall in Paris, a trend that began two years ago, as well as in its suburbs.

So, according to real estate agency Bien'ici, seven of the ten towns where prices have fallen the most over the past year are in the Ile-de-France region: Massy, Villegif, Ruy-Malmaison,... The portal notes a decrease in tension in the markets, with more real estate offers for sale, while demand is not increasing.

Fnaim, Laforet and Orpi also note a decrease in the number of transactions. "There is a great expectation because the real estate market is looking for a new framework," comments Yann Jeannot, president of Laforet, in an interview for AFP.

After sellers who have had difficulty accepting that their property is worth less than they expected, "buyers are also refusing to accept the reality of the fall in their purchasing power," he explains.

As a result of the reported sharp rise in interest rates, buyers who need to borrow money to buy are being forced to settle for less.

There has been more bargaining by buyers. According to Laforet, the average sale discount is 5.25% off the starting price. For Orpi it is approximately 3.5%.

AFP

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