Real estate: Prices are no longer being adjusted, they are falling.

The economy of France is going through tough times, marked by a decrease in the volume of transactions in the real estate market. From 2021 to 2023, this figure has dropped by 26%, according to notary data. The capital and the Île-de-France region are also feeling the effects. A significant decline in real estate prices, which began to be observed in Paris at the end of 2022, has spread throughout the country. According to the Notaires-INSEE index published on February 29, by the end of 2023, prices for existing properties in the country fell by 4% compared to the previous year, while just six months ago there was a growth of 0.5%.

The reasons for this downturn lie in the sharp decline in transaction volumes that the country is experiencing. As a result, from 2021 to 2023, the number of transactions decreased from nearly 1.2 million to 870,000.“The ability of households no longer allows for seeing many new buyers, and there is now a noticeable caution.”“The rapid rise in interest rates has significantly complicated the process of obtaining loans for citizens, and banks have become more cautious regarding lending,” comments Elodie Fremont, a representative of the Chambre des Notaires du Grand Paris.

The price decrease affects different regions of the country with varying intensity. In Paris, the decline is felt more sharply: the cost per square meter in the fourth quarter of 2023 was 9,770 euros, which is 7% lower compared to the same period last year.“And this is not the end yet,”Notaries claim, based on their preliminary indicators. According to preliminary contracts, the price per square meter in Paris could drop to 9,410 euros in April, which would represent an 8% decline year-on-year and more than 13% from the record set in November 2020.“The price in current euros will thus return to the levels of the summer of 2018.”— adds the Chamber of Notaries of Greater Paris.

If we look at the end of 2023, we can see that all districts of Paris are experiencing a decline in prices, with 13 of them seeing a drop of more than 5%.

In this bear market, several of the most attractive areas for buyers in the capital remain exceptions. In particular, the Notre-Dame district has become the most expensive, showing the highest price increase over the year (+15.7% to €18,000 per square meter). However, despite the overall trends in the other districts of the city, not all of them are devoid of market dynamics.

Thus, the situation in the real estate market in France continues to be under pressure from falling sales and declining prices. Given the current economic conditions and high interest rates, forecasts for further development remain cautious, and many potential buyers are waiting for a more favorable moment to purchase property, hoping for an improvement in the overall economic situation. This means that the market may need time to recover, and its stability will depend on the conditions set by bankers, as well as the income levels of the population.