Paris in retreat, the regions at equilibrium: the real estate market at the end of 2024

In November 2024, the French real estate market continues to transform itself, influenced by sharp price declines in some major cities, notably Paris, and by varied trends in the regions. While the capital is experiencing a significant drop in prices and demand at half-mast, other areas in the provinces are managing to stabilize their markets or attract new buyers thanks to more accessible prices and a much-appreciated living environment. This article provides an overview of the main dynamics underway, highlighting the impact of economic factors such as falling interest rates and environmental legislation, as well as the post-Olympic effects on certain Paris and Ile-de-France neighborhoods.

Paris: a marked fall in prices and a more buyer-friendly market

The real estate market in France reveals heterogeneous trends between the capital and the regions. In Paris, the price per square meter has fallen by 6.1% since the beginning of the year, reaching an average level of €9,286. This drop comes after years of high prices, which ended up limiting access to home ownership for a large proportion of buyers. Added to this is a drop in demand, with transaction volumes down 1.2% in Île-de-France, while national volumes remained relatively stable or fell slightly.

At the same time, the Paris real estate market is becoming increasingly favorable to buyers, who benefit from an increased negotiating margin, averaging 5.5% and rising to 10-15% for properties with defects or classified as "thermal flats". This downward trend gives buyers greater flexibility, a rare situation in a city where sellers used to have the upper hand.

The role of interest rates and inflation

Real estate interest rates, now around 3.5% versus 4.35% at the end of 2023, are a major factor in this decline. While inflation has also fallen significantly, from 6.14% at the start of 2023 to just 1.2% in September 2024, these factors are helping to stabilize the market, although they are not enough to revive momentum in Paris. Sellers are still reluctant to lower their prices, hoping for a return of demand as borrowing conditions improve.

A look back at the impact of the Paris 2024 Olympic Games

This summer's Olympic Games in Paris had a mixed effect on the capital's real estate market. Although some experts were anticipating a rise in prices in districts close to the Olympic facilities, this effect remained moderate in the context of a market already weakened by falling demand. There was, however, increased interest in certain prestige properties in central arrondissements and areas undergoing major change, such as Seine-Saint-Denis, which hosted a large part of the Olympic facilities.

This "slight Olympic Games effect" has therefore mainly benefited sectors that have benefited from investment in transport and infrastructure, but has not reversed the general downward trend in Paris prices. Nevertheless, this dynamic could encourage a one-off interest from foreign buyers for specific properties, particularly in areas that have undergone major improvements.

The regions: a market of contrasts

In the provinces, the situation is less uniform. Some regions, notably Nouvelle-Aquitaine and Occitanie, are experiencing stabilization or even a slight recovery, attracting buyers in search of more affordable prices and a better quality of life. Other regions, such as Hauts-de-France and Grand Est, are still experiencing declines in transactions, although these remain limited to around 6%.

Peri-urban and rural areas, in particular, are benefiting from the growing popularity of telecommuting and space-hunting. Demand for these less expensive properties is stabilizing prices, and even pushing them up slightly in some areas. The move to suburban areas has also led to an increase in sales of garden properties and detached houses, while previously popular city-center apartments are experiencing a slowdown in transactions.

The impact of the Climate and Resilience Act

Legislation on energy performance, in particular the Climate and Resilience Actis also having an impact on the market. Properties rated F or G on the Diagnostic de Performance Energétique (DPE) have become harder to sell, as buyers anticipate the renovation costs involved in bringing them up to the new standards. This is reflected in negotiations: thermal flats, especially in large cities like Paris, are often sold at a substantial discount.

Outlook for the end of 2024

For the coming months, many experts anticipate a further fall in prices, estimated at between 1% and 3% between now and the end of the year. This correction is seen as a way of rebalancing supply and demand, after years of rapid price rises, especially in major cities. However, attractive areas in the provinces, with efficient transport infrastructures and a pleasant living environment, could escape these falls and even attract new buyers.

Against this backdrop, the French real estate market in November 2024 emerges as a mosaic of opportunities and challenges: buyers benefit from more favorable conditions, while sellers, especially in Paris and the major cities, have to adjust their expectations to close sales.