After what French real estate professionals are calling an ‘annus horribilis’, there is some hope that the situation will improve in 2024.
In the past year, French notaries have noted a significant drop in property transactions – between 850,000 to 890,000 – in comparison to over 1.13 million in 2022.
On top of that, the number of new build sales significantly decreased – a year-on-year drop of 31.3 percent between June 2023 and 2022.
From the cost of living crisis and high interest rates, there were several problems to blame for the slowdown in France’s real estate market in 2023.
But looking ahead to 2024, experts are expecting a brighter picture.
Accessing a mortgage was particularly difficult in 2023, due to soaring interest rates and strict loan requirements.
As of November 2023, average interest rates for 20-year mortgages had gone up to 4.3 percent, a huge jump from February 2022, when rates were as low as 1.1 percent.
France’s council for financial stability also issued new rules in 2022 requiring that repayments – including insurance charges – must not exceed 35 percent of income, and borrowers must take on a loan with a maximum of 25 years, or 27 years in certain cases.
As a result, the number of mortgages granted dropped by 43.5 percent when comparing October 2023 with the year previous, according to France’s Housing and Credit Observatory.
Looking ahead to 2024, most experts expect rates to finally stabilise, as a result of inflation slowing down and the European Central Bank (ECB), who chose to pause rate hikes in late October 2023 following 10-consecutive increases since mid-2022.
As of mid-December, François Villeroy de Galhau, the governor of the Bank of France and an ECB