The French real estate market has been undergoing a series of corrections since 2023, reshaping the balance between buyers, sellers, and landlords. Transaction volumes, price levels, credit costs, energy constraints: each indicator tells a different part of the story. Measuring these discrepancies helps to understand the current state of real estate in 2024 and what lies ahead in the coming months.
Real estate transactions and price per m²: regional disparities in 2024
Market activity has hit a low point. The number of sales is experiencing its third consecutive year of contraction, following the historic peak recorded in 2021.
Not all regions are experiencing the same correction. Some departments show declines that are significantly more pronounced than the national average, while others are faring better due to sustained local demand.
This low plateau suggests a potential rebound, but it remains dependent on credit costs and household confidence.
To track these developments over the months, real estate news on Zenith Actu compiles regional and national data that feeds into this analysis.
Mortgage rates: the shift initiated by the ECB
Credit remains the lifeblood for buyers. After a rapid rise in rates, which went from around 1% to nearly 5% between 2022 and the end of 2023, the trend reversed in 2024. The European Central Bank has initiated a cycle of reductions in its key rates throughout the year.
This easing has mechanically pulled mortgage rates down. Borrowers in the second half of 2024 secured significantly better conditions than those in the first quarter. However, the level remains significantly higher than during the 2020-2021 period, which continues to reduce households’ borrowing capacity.
How a rate difference impacts a purchase project
A household that borrowed at 1% in 2021 could finance a property significantly more expensive than a household borrowing at 3.5% or 4% for the same monthly payment. This compression of purchasing power explains a large part of the price decline observed in the existing market.
The question for the coming months revolves around the pace of the decline. If rates continue to gradually decrease, the volume of transactions could start to rise, but the timeline remains uncertain.
Ban on renting energy-inefficient homes: the DPE schedule in practice
The Climate and Resilience Law has had a concrete effect on the rental market in 2024, and even more so since January 1, 2025. Since that date, any home classified G in the DPE is prohibited from being rented for a new contract or renewal in metropolitan France.
The threshold set is 450 kWh/m²/year of final energy. A home that exceeds this threshold is considered non-decent. Existing leases remain valid until their term, creating a transition period where a stock of G-rated homes continues to be rented but can no longer be reintroduced to the market without renovation work.
Schedule for upcoming DPE deadlines
- Since January 2025: ban on renting homes classified G (new lease or renewal)
- 2028: extension of the ban to homes classified F
- 2034: extension to homes classified E, which will affect a very significant portion of the French rental stock
This mechanism pushes many landlord owners toward two options: to undertake energy renovation work or to sell the property. The renovation market directly benefits from this regulatory constraint, while F and G classified properties are increasingly negotiated at a discount when purchased.
New housing in France: a persistent production crisis
The new housing segment remains the dark spot in the real estate market. Sales of new homes had already dropped by more than 30% in 2023. In 2024, the trend has not reversed. Real estate development continues to decline, and the stated goal of 400,000 new homes per year remains far from being achieved.
Several factors are at play:
- The cost of construction remains high, driven by inflation on materials and labor
- The planned end of the Pinel scheme, refocused on stricter environmental criteria, has reduced the appetite of individual investors
- The PTZ (zero-interest loan) has been targeted at certain areas and types of properties, limiting its leverage effect on demand
This gap illustrates a two-speed new housing market, where collective development continues to collapse while other segments show earlier signs of recovery.
The existing market benefits indirectly from this shortage: due to insufficient new supply, part of the demand shifts to existing properties, which helps to stabilize prices in certain urban areas despite the overall decline.
The first half of 2025 will provide a clearer picture of the trajectory. If the decline in credit rates is confirmed and transaction volumes stabilize sustainably, the market could enter a phase of normalization after three years of correction. The energy constraint, on the other hand, will only strengthen with the DPE deadlines of 2028 and 2034, gradually reshaping property values according to their thermal performance.
