What Trends Are Shaping the Real Estate Market in the First Quarter of 2024?

Real Estate Prices Continue to Fall Across France

According to Notaires de France and INSEE, prices for existing homes dropped by more than 5% year-over-year in the first quarter of 2024. In just nine months, the decline has nearly tripled (–3.9% in Q4 2023 vs. –2% in Q3 2023).

This marks the third consecutive quarter of decline nationwide, and the sixth in a row in the Île-de-France region, where prices have fallen by more than 8% between Q1 2023 and Q1 2024. In Paris, seven districts now show average prices below €9,000 per square meter, compared with five the previous quarter, while eleven districts have dropped under the symbolic €10,000 mark. In regional markets, prices continue to slide, showing a 4.2% annual decrease. Major cities are experiencing sharp declines (with the exception of Nice, which remains relatively stable), while tourist destinations are beginning to see prices flatten—or even dip slightly in recent months.

Slight Improvement in Mortgage Rates

Mortgage lending has fallen threefold in just two years, reaching its lowest level since 2014 as of March 2024. Although rates have eased slightly since the beginning of the year, this drop is far from compensating for the fourfold increase of the previous two years. In March 2024, the average mortgage rate stood at 3.9%, according to the Observatoire CSA/Crédit Logement, and is expected to stabilize by the third quarter of 2024.

The Banque de France also reports a sharp decline in housing loans granted, with just €21.7 billion issued in Q1 2024 down from €38 billion the previous year and €56.3 billion two years ago. This 61% decrease in two years clearly reflects the cooling of the credit market, a major factor behind the slowdown in real estate transactions.

Transaction Volumes Continue to Decline

Over the past 12 months, the number of property transactions has dropped to 822,000 as of the end of March, compared with 931,000 at the end of September 2023 (on a rolling 12-month basis). Sales of existing homes are down 24% year-over-year and 40% compared to Q1 2022.

In both Île-de-France and regional areas, this decline is more pronounced for houses than for apartments. The trend appears to stem from lower demand for single-family homes once highly sought after as rising interest rates continue to limit household borrowing capacity.

Conditions are even tougher in the new housing market, where sales have collapsed over the past 18 months, reaching their lowest level since 1995, largely due to inflation-driven increases in labor and material costs.

What Are the Market Outlooks?

Falling mortgage rates and property prices are undoubtedly good news for buyers. However, these positive signs remain insufficient to reignite market momentum at this stage. The Fédération Nationale de l’Immobilier (FNAIM) forecasts an 8% drop in sales for 2024, with around 800,000 transactions expected and prices likely to continue their downward trend.

The Banque de France anticipates slow economic growth, which is expected to keep weighing on the property market.

A real rebound therefore seems unlikely in the coming months. Nonetheless, there are a few encouraging signs, such as an increase in property viewings and traffic on real estate listing websites—though these seasonal fluctuations are fairly typical for this time of year.

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