SeLoger and Meilleurs Agents’ January 2025 barometer has painted a promising picture of the French property market’s recovery. After a challenging 2023, the market has shown signs of stabilization, with increased transactions and a slight uptick in prices.

Key Findings:

• Stabilizing Prices:  The national average price has settled at €3,060/m², with a minimal decrease of 0.1%. Paris, while still commanding a premium at €9,355/m², has also experienced a slight price correction.
• Increased Transactions: The number of transactions in 2024 neared 800,000, exceeding initial expectations. This surge can be attributed to increased purchasing power driven by lower interest rates.
• Regional Variations: While national prices have stabilized, regional markets exhibit diverse trends. Cities like Strasbourg and Lille saw price increases in December, while Nantes experienced a decline.
  – Strasbourg: Experienced a 0.5% price increase in December 2024.
  – Lille: Saw a 0.5% price increase in December 2024.
  – Nantes: Experienced a 0.6% price decrease in December 2024.
• Demand Surge: Demand for real estate has risen significantly, especially in major cities like Toulouse (37% increase), Bordeaux (38% increase), and Paris (31% increase). However, the abundance of properties gives buyers a degree of negotiation power.

Factors Driving the Recovery:

• Lower Interest Rates: The European Central Bank’s accommodative monetary policy has led to a decrease in average credit rates.
• Average credit rates decreased from 4.35% to 3.5% in 2024, significantly improving affordability for many buyers.
• Increased Purchasing Power: Higher incomes and lower interest rates have boosted household purchasing power, fueling demand.
• Stabilized Economic Conditions: A more stable economic environment has instilled confidence in buyers.

Outlook for 2025

The market is expected to continue its recovery in 2025, with potential for further price increases. However, several factors could influence this trajectory:

• Interest Rates:
  – If interest rates remain low or continue to decline, it could further stimulate demand and drive prices up.
  – Prediction: Forecasts suggest a slight further decrease in mortgage rates in 2025, potentially to around 3%.
• Economic Uncertainty:  Political and economic uncertainties, both domestically and globally, could dampen buyer sentiment.
• Regulatory Changes: New government policies or regulations could impact the market, either positively or negatively.

Analysis of Notaires de France Report

The Notaires de France report corroborates these findings, highlighting a stabilization of prices after a period of decline. The report also emphasizes:

• Decreasing transaction volumes: While the market is recovering, transaction volumes are still below pre-pandemic levels.
  – Transaction volumes in 2024 are estimated to be around 750,000, a significant decrease from 1.13 million in 2022.
• Importance of economic stability:  The report stresses the need for a stable economic environment to sustain the market’s recovery.
• Focus on energy efficiency The report notes a growing trend towards energy-efficient properties, with buyers increasingly prioritizing homes with higher energy ratings.
  – The share of sales of the least energy-efficient homes (classes F and G) has decreased in 2024, while the share of the most energy-efficient homes (classes A and B) has increased.

Conclusion

The French property market appears to be on a path to recovery, with stabilizing prices and increased transactions. While the market is subject to various economic and political factors, the current outlook is positive. Buyers can expect a more balanced market with opportunities in both established and emerging areas. However, it is crucial to stay informed about market trends and consult with real estate professionals to make informed decisions.

Key takeaways for potential buyers and investors:

• Consider regional variations: Different regions may exhibit different trends.
  Focus on long-term value: Look for properties with strong fundamentals and potential for appreciation.
  Stay informed about market changes: Keep abreast of interest rate movements, government policies, and economic indicators.
• Consult with experts: Seek advice from real estate professionals to navigate the market effectively.