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French property: Analysis of the market

The analysis of the real estate market is derived from the French property marker report of notaires de France. It presents the real estate situation in France: trend and evolution of real estate prices.

French older properties market

With 970,000 transactions for older properties in the French Provinces, 2018 ended as it began! The number of transactions recorded at the end of last year is markedly similar to the number of transactions recorded little more than a year before (968,000 transactions in December 2017). The symbolic milestone of a million transactions was therefore not reached in 2018. Can we now expect to reach a persistent plateau at an altitude of 970,000 transactions, and expect long-lasting stability at such a volume over the months and even years to come?

Changes in the volumes of older properties in the 2000–2019 period

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In property as elsewhere, there are now barely any markets that can be modelled over the long term. For better or for worse, this is a worldwide economic trend that we have to now get used to. Admittedly, analysis of volumes from the last 20 years (and particularly the 2000–2008 period) could count on thresholds close to 850,000 transactions. This would however completely disregard two decades of house-building and the number of mutable housing units, which have increased considerably.

In addition, none of the parameters known to date suggests a risk of stalling in the short term:

  • Interest rates, fundamentally and historically weak, put purchasers in good financial stand-ing and enable those who had previously left the home ownership market to enter it again.
  • These rates seem set at low thresholds, at least in the short term, which motivates people looking to buy, across all categories. The property market, massively influenced by borrowing, is undeniably affected.
  • Property remains a safe investment, with few equals. - Individuals’confidence in this market does not seem to have been affected by the social unrest in France over the past few months.
  • Although very often stated as being in a sharp upturn, prices generally remain stable and are even falling (without even taking into account any corrections for the effects of inflation); the upward trends of Greater Paris and several regional centres (Nantes, Rennes, Lyon and Bordeaux in the main) are not indicative, in themselves, of the national market.
  • As such, it is interesting to note that overall, since mid-2018, the upward trend in apart-ment prices does not even apply to half of the departments of France (45% rising, against 40% falling and 15% stable).

On this last point, we do not believe, however, that this relative disparity in prices in the French Provinces is indicative of a rupture heralding a downturn. On the contrary, insofar as the 2017 trend by department was generally rising (for around 60% of them on average), it seems, conversely, to herald price stabilisation and, consequently, the market settling down. The general price stabilisation is such that it effectively maintains increased transaction volumes and, therefore, a dynamic market in good health.

As such, it should be noted that even Bordeaux, which has seen double-digit growth for almost 3 years, is seeing its upward price trend slowing (in median prices, +5.7% over one year for older apartments in the fourth quarter of 2018 and 8.3% for older houses). This is a good omen, as its recent performance seemed less and less consistent with the average income of its inhabitants and its rental market, to speak only of parameters purely linked to access to housing. Let us hope that this rough adjustment reflects a ceiling reached, and that it is not made of glass. Lyon, recently overtaken by Bordeaux in terms of price, is now showing higher growth, enabling it to retake its position!

Geographical location and the amount of jobs are determining factors. There is thus clear correlation between the property market’s vigour and develop-ment of the labour market. Gaps continue to widen between areas that are sought-after due to healthy job prospects and other areas. The further one gets from economic centres, the more complicated the situation in terms of the resale market. The divide between these two Frances is a little more evident in a market that only remains dynamic in strong economic centres.

Changes in projected indicators based on pre-contracts in mainland France: projection at the end of May 2019

According to early indicators up to May 2019, the upward trend is continuing at around 3% per year. At the end of May 2019, the annual change is around +4.4% for apartments and +2.4% for houses. According to early indicators on pre-contracts from Notaires du Grand Paris, prices in the capital should reach €9,790 in May 2019, which amounts to a rise of 6.3% in a year.

French property market report - April 2019 - trends

In the French provinces, the trend shown by the early indicators should roughly mirror the national trend with a predicted annual rise of 4% on the apartments market and 2.2% on the house market at the end of May 2019.

For apartments in the largest towns, the prices in Toulouse, Bordeaux, Rennes, Nantes and Lyon are expected to continue to progress at between 5% and 10%. In Marseille and Montpelier, prices should be levelling off.

For older houses, prices in the main agglomerations should remain in an upward trend, with the exception of Toulouse which is levelling off.

French new housing market

The new housing market - Key figures House building: Figures at the end of January 2019

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French property market: Consult the interactive PDF

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