Real estate in Ile-de-France has been going through a difficult period for several quarters. This instability is characterized by a significant decrease in sales volumes and prices. This phenomenon is not without consequences on the local market, marking a persistent decline but nevertheless in an attenuating phase.
An area marked by wait-and-see attitude and forced sales
Over the quarters, the figures show that the Ile-de-France region is experiencing a notable contraction in sales volumes old housing.
During the first quarter of 2024, there was a drop of 22% compared to the previous year. This negative trend continued with a drop of 17% in the second quarter and 10% in the third quarter.
Despite this reduction in the rate of decline, it is clear that activity will not quickly return to its previous levels.
In particular, Paris as well as its Small and Large Crowns are not spared. The number of transactions for apartments there decreased by 11%.
Looking more closely at the data, we see that compared to two years ago, the sales volume has dropped 39%illustrating the extent of the real estate crisis which is shaking the Paris region.
Moderate annual price drops
Alongside the decline in sales, real estate prices also followed a downward trend.
However, this decline appears to be stabilizing. For example, for apartments in Ile-de-France, the annual retracement of prices, initially at 7.9% in the first quarter of 2024, was revised to 6.6% in the second quarter, then to 5.2% in the third. quarter.
Houses follow a similar trajectory although the decline is slightly dampened. At the start of the year, their price fell by 8.3%, then dropping to 8.0% and finally recording a decrease of 5.3% in the third quarter.
Compared to the high levels of the third quarter of 2022, these figures reveal a overall depreciation of 10.3% for apartments and 10.5% for houses.
The particular case of Paris intramural
Paris intramural displays even more striking statistics.
Since the end of 2020, apartment prices declined continuously, reaching a total decline of 11.8% in the third quarter of 2024.
Forecasts suggest a continuation of this trend with prices per m² potentially falling to 9,360 euros in January 2025, marking a potential annual decline of 3.2%.
For eight consecutive months, the average price per m² in the capital has hovered around €9,500, demonstrating a certain resilience despite deteriorated market conditions.
However, this relative stability masks a gradual decline expected shortly.
Forecasts and expectations for the future
Despite the current situation, leading indicators on preliminary contracts provide some optimism for the future. By January 2025, a moderate decrease in prices of the order of 1 to 3% is anticipated.
In the Little Crown, an annual drop of 2.1% for apartments and 3.4% for houses is expected.
As for the Greater Crown, projections indicate a less pronounced reduction: 1.4% for apartments and the same for houses.
The hope now rests on the fact that this gradual downward movement will allow a partial improvement in solvency buyers, thus mitigating general economic uncertainties.
Gradual improvement in solvency
The rate shock experienced earlier appears to be starting to ease, allowing greater accessibility to financing for potential buyers.
The average monthly repayment, which reached its peak in the summer of 2023, is expected to decline until January 2025, thus slowly facilitating the return of private investors to the Ile-de-France real estate market.
Consequences and implications on the real estate market
In this fragile context, the sector remains dominated by an atmosphere of wait-and-see. Both buyers and sellers adopt cautious behaviors, making binding sales.
It goes without saying that for some owners, selling becomes imperative in the face of increasing financial pressures.
Faced with this situation, certain measures can be taken to encourage a more dynamic recovery.
A review of credit policies, accompanied by continued rate cuts could offer room for maneuver to market players.
New trends such as the demand for payment flexibility or the sale of goods via digital platforms also represent relevant avenues for innovation.
Strategies to revive the market
- Gradual reduction in interest rates to facilitate access to real estate credit
- Adaptation of tax policies to reduce the burden on owners and new buyers
- Promotion of alternative and innovative financing solutions (real estate crowdfunding, loans between individuals)
- Strengthening transparency and flexibility in transactions to restore consumer confidence
Revitalize the Ile-de-France real estate sector will therefore require a multi-faceted approach involving both financial institutions and local regulations.
