Data from ERA Immobilier and Foncia networks show that things are getting better

The French old real estate market experienced a downturn in 2024, with an 8% drop in transaction volumes, largely due to high interest rates. The first half of the year saw declining activity, but the situation improved in the latter half, with a 4% rise in transactions and a 7% increase in sold surface areas in Q4. Price corrections varied across regions, with Paris seeing a 4.7% decrease. Second-time buyers dominated, while investors retreated due to stricter regulations. Interest rate stabilization and buyer confidence contributed to late-year growth. ERA Immobilier forecasts 850,000 transactions in 2025, signaling a market recovery driven by adjusted pricing, improving credit conditions, and a balanced supply-demand dynamic.

A Challenging Start to the Year

From the first half of 2024, the real estate sector suffered the consequences of rising interest rates, which peaked at the end of 2023. "The deterioration of credit conditions at the end of 2023 was immediately felt in the market from January," analyzes ERA Immobilier. The decline in transactions allowed for a gradual replenishment of inventory, accompanied by a drop in prices.

According to Foncia, transaction volumes fell by 8% compared to 2023, with the first quarter being particularly difficult. However, this trend began to reverse from the third quarter, with the fourth quarter even recording a 4% increase in sales and a 7% increase in sold surface areas.

Price Adjustments and More Selective Buyers

The effect of the gradual decline in interest rates became apparent from the second half of the year, with a notable acceleration at the end of the year. The price correction played a crucial role: in Paris, prices fell by 4.7%, reaching an average of €9,557 per square meter, while in the regions, the average decline was 3.8% for houses and 0.8% for apartments.

However, these trends varied by geographic area. In Île-de-France, prices dropped by an average of 3.8%, but with strong disparities: -6.4% in Yvelines, versus +5.2% in Val-d'Oise. In some regions like Nouvelle-Aquitaine (+9.6% transactions) and Occitanie (+8.3%), activity grew significantly. Buyers were more cautious and demanding. "Second-time buyers dominated the market in 2024, representing 53% of transactions. They sought properties without renovations, while first-time buyers, facing financing difficulties, accounted for only 31%," explains ERA Immobilier. Investors, on the other hand, largely withdrew from the market, with their share dropping from 30.6% in 2022 to just 16% in 2024, due to stricter taxation and energy regulations.

A Recovery in Activity at the End of the Year

Despite a market under pressure for much of the year, the latest trends are encouraging. According to Foncia, the last quarter of 2024 saw a 4% increase in transactions, a 7% rise in sold surface areas, and a 1.4% drop in the average price per square meter. "Well-valued properties continue to sell well," notes Foncia. This gradual return to growth is largely driven by favorable interest rate developments, which have restored buyer confidence. However, some uncertainties remain, particularly the possibility of another interest rate hike, which could slow this momentum.

Outlook for 2025: Towards a Sustainable Recovery?

Prospects for 2025 seem positive. ERA Immobilier forecasts a return to a transaction volume of around 850,000 sales, a figure more in line with historical market trends. "2025 promises to be a pivotal year, marked by opportunities for recovery and a gradual return to a more fluid and sustained market dynamic," predicts Éric Allouche, Executive Director of the ERA Immobilier network.

Several factors support this outlook: interest rate stabilization, price adjustments making purchases more attractive, and a better alignment of supply and demand. If the trend continues, 2025 could mark the end of a correction cycle and the beginning of a new growth phase for the old real estate market in France.