Crisis in the real estate market: reduced sales and falling prices ...

The real estate market continues to feel the effects of the recession amid inflation and rising interest rates. Home prices are coming down. This is evidenced by FNAIM's monthly real estate barometer for October. In Paris, prices fell 5.2% in a year.

Housing has begun to face a market turnover that could continue. The year 2023 should end with a historic record of a 21% year-over-year sales decline (to 885,000 sales) and price declines accompanied by sustained inflation. Overall, the housing market went from one shortage to another: the transaction market lockout caused the shortage of housing for sale to dissipate, but the problem shifted to a shortage of rental housing. That said, the supply of housing is inadequate, especially in some stressed areas. "The crisis is serious and we are only beginning to realize it," stresses Loic Kanten, president of FNAIM. This should alert the authorities, who do not seem to realize the full measure of the crisis that threatens the real estate market and prevents access to housing for many French people. At a time when the situation calls for proactive policies to support property acquisition, promote construction and help private landlords with long-term leases, the urgency for action is becoming more pressing.

The cycle of declining real estate prices has begun.

"The decline in the number of transactions accelerates from 2023 to 955,000 sales in France (-17% for the year) in the last 12 months to August 2023," notes Emmanuel Lebé, director of economic research -LABEL. This entails lower prices (down 0.8% from January 1 to October 1, 2023) after several years of increases. The bargain market is now more favorable to buyers. The sharp rise in interest rates starting in 2022 has triggered a downward price cycle. The price reductions affect most of the area. Over the year, prices are down in Paris (-5.2%) and in 7 of the 10 largest cities, except for the southeastern cities (Nice, Montpellier and Marseille), which have so far fared better. In some major cities, the purchasing power of families is low compared to historical levels and appears to be reaching its limits. The year-on-year slowdown also affects the Paris suburbs (-2.5%). Mid-sized and rural towns are faring a little better. Prices are best held in Corsica and the Provence-Alpes-Côte d'Azur region.