Will the fall in real estate prices continue into 2024?

The numbers speak for themselves. In older real estate, prices fell 1.8% in the third quarter from a year ago, according to the Notaires-Insee index released Nov. 30. House prices fell 1.6% and apartment prices fell 2%.

Price growth is declining.

Price growth, which has been ongoing since late 2015, has slowed since mid-2022, when it still exceeded 6% per year. After rising 6.8% in the second quarter of 2022, price growth in older properties fell to 6.4%, 4.6%, 2.7%, and then 0.5% in the second quarter, before falling 1.8% in the third quarter from a year ago.

This trend is also confirmed by Laforêt immobilier. In September 2023, the national level was down 3.1% year-on-year. "The decline in prices covers the whole''France, but remains insufficient for buyers,' notes the real estateagency network. This is particularly true for the Ile-de-France region, where prices have fallen by 6.4% compared to September 2022.

According to agency Guy Hoquet, the price decline is around 1.4%. "At this point, it's still not significant," notes Delphine Ehrman, director of external relations and lateral projects in an interview with L'\''Express. But there are fewer and fewer places that remain untouched. For example, the resorts of La Baule and Port-Niche (Atlantic Loire), where the market is still active, have seen a 3-5% drop in prices on the first line and in residential areas, according to Evidence immobilière, an agency present in these two communes.

The decrease in prices is due to the rise in interest rates

This decrease is mainly due to the''pandemic. "We lived in a truly abnormal period where as soon as we put a property up for sale, even with the price set 5-10% above the valuation, we would immediately have 15 inquiries and it had to be visited immediately. At that time, if the buyers did not make an offer on the price, the object went out of their hands," he says.

The president of the Laforêt chain points out that while the margin for negotiation was around 4.5% in the first half of 2022, when the market was operating at full capacity, it is now around 6% of the national level by the end of the year. The proportion of properties in negotiation has also increased, from six properties out of ten to nearly eight properties out of ten.

The president of the Laforêt chain argues that "sellers have to be reasonable when they have''there are buyers who can get financing." "The balance of power between sellers and buyers is starting to shift. It's a profound change from the market we've known for the last 10-15 years," confirms Delphine Ehrman. However, Yann Jeannot brings some caveats: "First, buyers must be able to obtain financing and prove it." The Bureau Vincent de Bejarry now "immediately verifies the solvency" of the buyer, requiring them to "be sure to contact a broker to provide them with a certificate of solvency".

That's changed in 2023. "For six months to a year now, we've had no price offers at all, whereas in 2021 they were pretty regular. Real estate prices''believe it.

While price declines are likely to continue particularly in Ile-de-France, Brittany and Normandy remain two 'attractive' regions that could continue to play a role in the future. This trend''is reinforced by the fact that more retirees are leaving the south of France to settle in these regions, in particular due to climate change and flooding, notes Yann Jeanneau.

"I don't foresee a terrific first half of 2024. Real estate professionals will have to continue to endure in the first part of 2024," says Jean-Baptiste Bullet in an interview with L'\''Express. According to a spokesman for the notaries of Grand-Paris, the price reductions "should level off". Vincent de Bejarry also believes that this decrease, seen in 2023, "will continue slowly" next year, perhaps at 2-3% or even 5%. "I'm not sure there will be any significant upheaval, there probably won't be a collapse in prices," predicts Evidence' commercial director'Immobilière.

When asked in October to Jeanine Le Figaro de Kerangal, director general of the Institute of Real Estate and Stock Property (IEIF), he was more confident: 'I don't see how we can avoid an even more significant price adjustment...'. France will probably face a price decline of at least 10% over the next two or three years, with strong fluctuations in different cities. In Paris, where prices have risen a lot in recent years, the decline could be as much as 15-20%," continued Jean-Baptiste Bullet.

"For 2024, the outlook remains uncertain," said Delphine Ehrmann. "If the economic situation improves, which seems to start at the end of 2023, with interest rates stabilizing and inflation slowing, I expect transaction volume to be so''the same or slightly lower than in 2023. If this is the case, the decline in prices could continue, but with some slowing down," says Herman. However, Yann Jeannot clarifies the impact of this decline: 'Many communes are in a shortage market, where there are very few offers for sale.' In addition, he says that properties that are in the price range of 250,000 to 300,000 euros, that is, in the heart of the real estate market, will still be in demand. "These properties are very much in demand," notes Yann Jeannot, pointing out that the average transaction price in Laforêt is €267,000.

"There seems to be a new equilibrium between buyers and sellers in 2024," says Delphine Ehrmann. But the real problem remains in supply with a shortage of new housing. "We are now living in the present''A housing crisis that is more dangerous than it appears,' she worries." And that crisis may not be resolved quickly.