Because of a drastic increase in interest rates on mortgage loanspotential buyers are becoming scarce, forcing owners to revise their selling prices downwards. This trend is particularly observed in certain French departments where the falling real estate prices is significant.
A national but disparate trend
At the national level, the National Real Estate Federation (FNAIM) has noted a average price drop of 1.3% between April 2023 and April 2024. However, this price reduction is not uniform across the whole of France.
The most affected areas
Some regions are seeing much more spectacular declines. In Gironde, for example, prices have fallen by 4,3 %while in Loire-Atlantique, the drop is 4,7 %. Paris, often seen as a robust market, also sees a notable decrease in 4,8 %The situation is even more worrying in the Rhône department with a fall of 5,6 %.
Some notable exceptions
Unlike the majority of departments, some continue to see a slight price increaseFor example, in Côtes-d’Armor, Haute-Corse, and Alpes-Maritimes, property prices are experiencing moderate growth despite the general downward trend.
Factors influencing this price decline
The increase in interest rates
The main reason for this general decline in property prices lies in the significant increase in interest rates for mortgage loansThis increase limits the accessibility of credit for many potential buyers, thus reducing their purchasing power by almost 25 % over the past year.
The collapse of demand
With fewer buyers able to finance their real estate project, sellers are forced to reduce their prices to attract the rare solvent buyers. This phenomenon causes significant adjustments on the market, especially in areas initially subject to high demand.
Implications for future buyers and sellers
Opportunities for buyers
- Access to previously financially inaccessible assets.
- More favorable price negotiations thanks to a falling market.
- Possibility to take advantage of the reductions before a possible stabilization or rise in prices.
Strategies for Sellers
- Revise profit expectations downwards to sell quickly.
- Strengthen the presentation and attractiveness of the goods put up for sale to stand out.
- Use professionals to properly assess the current market value of properties.
Future prospects for the French real estate market
It is difficult to predict with certainty how long this downward trend will last, but several experts agree that as long as interest rates will remain highthe real estate market could continue to face pressure. However, some regions could see a stabilization or even a slight recovery in prices if local demand remains strong or if overall economic conditions improve.
Possible scenarios
If interest rates start to fall, we can expect a revival of real estate demandwhich could stabilize prices. On the other hand, if rates remain high or increase further, the current trend of price drop could be prolonged.
Impact of government policies
The measures taken by the government in housing and taxation will also play a crucial role. Tax incentives for buyers or programs to support home ownership could boost the market.
The evolution of the French real estate market remains uncertain, but current trends clearly point to a period of readjustment. Buyers and sellers alike will need to remain attentive to economic and political changes to effectively navigate this changing environment.
