The year 2024 was marked by a period of slowdown for real estate players. Now, however, the real estate market is showing signs of recovery. Buying power is up, mortgage rates are down to around 3%, the number of transactions is up, demand is on the rise… There’s a real sense of optimism in the air this autumn. At their press conference on Tuesday, September 3, SeLoger’s experts predicted a recovery in demand by 2025. Let’s take a closer look at the key points of this market analysis and the real estate trends for the months ahead.
Promising signs of an imminent market rebound
After two dismal years, notably with a sharp drop in transaction volumes, a wave of hope is blowing through the real estate market, with momentum seemingly regaining strength. Thomas Lefebvre, vice-president of data at SeLoger: “It looks like the worst is behind us, both in terms of activity and the number of transactions, but also in terms of prices”. (Source 1)
“We’ve stopped losing ground”
The number of sales declined steadily, reaching a 12-month low of 756,000 in August. Although transaction volume is forecast at 771,000 sales by the end of the year, representing an 11% drop compared to 2023 and a notable 40% decrease compared to the years 2021 and 2022, SeLoger’s data experts remain optimistic and hope for a lull in the coming months.
Since February, the glut of offers on the market seems to have stabilized. “Although there are still many properties for sale, the dynamic is tending to stabilize,” explains Thomas Lefebvre, Vice-President of Data & Science at Seloger.com. The reasons for this renewed optimism? “For the first time since 2022, we’ve stopped losing ground. The months of May, as well as June, July and August, have shown better real estate activity in 2024 than in 2023,” points out Pierre Vidal, SeLoger’s Director of Research.
Falling property prices
As far as prices are concerned, the trend is also favorable. Although the decline continues into 2024, it is slowing, with an annual decrease of 1.3% in September, compared with -3% in April. This
stabilization is particularly noticeable in the majority of major French cities, as well as in 63% of the country’s small and medium-sized towns, such as Bordeaux, where prices fell by -1.8% between September 2023 and September 2024, compared with -8.9% between April 2023 and April 2024.
“Today, homeowners are willing to accept price reductions, which makes it easier to conclude sales,” stresses Thomas Lefebvre.
In addition, prices of older homes are gradually returning to more reasonable levels, with an average reduction of 2% to 4%, most marked in Paris, where the price per square metre is now €9293 (-7% over one year). This fall in prices, combined with lower interest rates, is improving real estate purchasing power.
Main key interest rate cut
Interest rates are falling steadily, averaging 3.62% over 20 years (source *2: Crédit Logement/CSA). On September 12, the European Central Bank announced a further cut in its key rate, reducing it by 25 points from 3.75% to 3.5% from September 18, 2024. This marks a one-point reduction on the 4.30% recorded last December. These revealing figures seem to suggest an encouraging trend.
As the purchasing power of French households evolves, so do the conditions for granting mortgages. Increased competition between financial institutions to attract new customers reinforces this trend, making mortgages more attractive. Against this backdrop, banks are seeking to attract customers back. They are showing greater flexibility, and the number of loans is on the rise again.
HCSF supports the real estate sector
In 2024, the Haut Conseil de Stabilité Financière (High Council for Financial Stability) relaxed its lending standards. As a reminder, the debt ratio for borrowers remains at 35%, and the maximum repayment period for a home loan must not exceed 25 years. However, some adjustments have been made, such as extending the term of a loan to 27 years if work represents 10% of the total amount of the transaction, or eliminating interest on bridging loans only if the total amount of the loan does not exceed 80% of the value of the property acquired.
A still timid recovery in purchasing power
Although interest rates remain high, their gradual decline, combined with rising incomes and revised property prices, has offset more than a third of the loss of purchasing power observed between January 2022 and December 2023. As a result, the French have regained 4 m² of purchasing power since December 2023. Currently, the average French household can purchase a 68 m² property with a 20-year mortgage.
According to Thomas Lefebvre, “real estate purchasing power should return to its 2022 level by spring”. In Paris, the adjustment in property prices has significantly improved purchasing power.
Although this increase in purchasing power may not be enough to return to pre-crisis levels, SeLoger predicts a gradual catch-up, thanks in particular to a probable further cut in key ECB interest rates, and consequently in mortgage rates.
Growing demand
In three years, demand has fallen by 14%, reaching its lowest level at the end of 2023. However, 2024 marked the strongest rebound seen at the start of the year, with demand up 22% since
January.
“This increase is twice that of last year and five times greater than in 2022. The current rebound in demand is comparable to that of 2021, when the market was boosted by the post-Covid period,” points out Alexandra Verlhiac, economist at SeLoger. This phenomenon can be observed throughout the country.
“Since the end of August, buyers have been coming back”.
“The phones are ringing again in real estate agencies, and visits are resuming. We can feel the dynamism returning to the real estate market,” says Sandrine Allonier, spokeswoman for Vousfinancer, a company specializing in real estate brokerage. (Source Radio France)
Several surveys show a strong upturn in purchasing intentions and an increase in negotiation margins, leading to a rise in the number of compromises signed. Despite an uncertain political context, the fundamentals for a recovery are in place: demand for housing is strong, the real estate market is clear and opportunities are presenting themselves. The fall in lending rates is the main reason for this, and has helped to make people more resolvable: it is now possible to borrow €15,000 more on the same salary than a year ago.
Loan applications are up 50% on the same period last year. Fluidity is returning to the market, with some price negotiations on the ground ranging from 3% to 8%, as some owners have been waiting to sell for almost 1 year. The end of the crisis in this market, which had completely seized up, seems close at hand.
Mercure Forbes Global Properites review
At Mercure Forbes Global Properties, the typology of our customers and their purchasing motivations are somewhat distinct: the acquisition of a “Mercure” property is first and foremost an asset investment. In short, Mercure customers don’t buy a property just to live in. Their motivation is different: they like to live in a prestigious location, steeped in history, or benefiting from an exceptional environment, with a unique characteristic….
For Mercure Forbes Global Properties, 2023 and early 2024 were fairly even years. On the other hand, the political instability of recent months has seen buyers hesitate, waiting in particular for a readjustment in property prices, which had seriously risen in recent years. Today, buyers seem reassured and are coming back. On a positive note too, sellers have realized that prices had been rising sharply for some time, and after a period of hesitation and uncertainty, prices for these properties are now at more reasonable levels. As a result, these beautiful properties are now back on the market, and we are seeing a significant increase in the number of sales mandates entrusted to us.
Good news then. Mercure Forbes Global Properties: many beautiful properties are coming onto the market!
