According to the notaries of Greater Paris, the decline in volumes and prices will continue, but at a less sustained pace. There are even some signs of recovery, especially if interest rates fall.
“The crisis is deep and it risks being long-lasting.” This is the implacable observation of the notaries of Greater Paris. Nevertheless, in the midst of the slump, they note “encouraging signals.”
It is still a “sluggish” Paris region market that the notaries described in their quarterly press conference on Tuesday, September 10. According to their figures, sales of old homes in the Paris region fell by 18% in one year in the 2nd quarter of 2024. Over two years, the drop is even 38%.
According to them, when sellers put a property on the market, it is often because they are forced to do so (by the arrival of a child, a divorce, a job transfer or an inheritance, etc.).
On the house side, the fall is even more pronounced with sales down 21% over one year and 44% compared to 2022. “After being boosted by the consequences of Covid and a renewed desire for space and greenery, the house market is still experiencing the biggest drops in activity,” note the notaries.
A “historically low” level of activity
For apartments in the Paris region in the second quarter, the drop in sales volumes was 17% in one year and 36% in two years.
“The level of activity is historically low and close to what we
could observe during the subprime crisis.”
However, if the market remains bearish, the decline in sales is gradually becoming less severe, but in a very slow movement. For the 3rd quarter, based on pre-contracts, the notaries of Greater Paris are still anticipating a drop in volumes but at a less severe pace.
Price decline slows
On the price side, the trend is not exactly the same. The contraction in activity has naturally weighed on sales prices, but in a measured manner.
“If the buyer is still waiting for a 20% price drop, it won’t happen!” warns Elodie Frémont, a notary in Paris.
In the second quarter, prices fell by 7.2% in Île-de-France over a year, compared to -8.1% in the first quarter. Prices continue to fall overall, but less quickly. At the national level, the trend is the same.
To explain this slowdown in the fall in prices, notaries have formulated several hypotheses, without being able to verify them. “Has the fall in rates encouraged owners to maintain their prices in the hope of a recovery in demand? (…) Does awareness of the tensions on the supply of housing in Île-de-France encourage owners to keep their properties?”, they ask.
“What is certain is that the slowdown in the fall in prices prevents a more marked improvement in household solvency.”
In the absence of a sharp drop in prices, a drop in rates
In this context, what are the prospects? Despite a less pronounced drop in prices than expected, buyers should be able to count on a drop in home loan rates in the coming months.
“This remains a key determinant of solvency and the key driver of recovery in activity, given current price developments.”
And notaries are seeing other positive signals. “Credit conditions are improving, bankers are more open to negotiation and are asking for a little less down payment,” explains Elodie Frémont.
Furthermore, according to her, bankers are making greater use of the flexibility allowed in relation to HCSF standards and are making credit a loss leader to attract new customers.
Finally, notaries are anticipating a recovery in activity in the coming months. They are particularly hoping for a catch-up effect after a real estate spring that did not take place, neutralized by the dissolution of the National Assembly.
But we will have to be patient before we see the market take off again. As one notary confides, “real estate is like an ocean liner: when it slows down, it slows down slowly, but when it needs to be restarted, it is also very slow.”
