The French real estate market closed 2024 with a volume of approximately 775,000 transactions, marking a third consecutive year of decline and a drop of more than a third compared to the peak in 2021. This contraction masks very contrasting territorial dynamics and regulatory changes whose effects will be felt well beyond the past year.
CRR3 Regulation and Real Estate Credit: The Prudential Framework That Changes the Game
The adoption of the CRR3 regulation on May 31, 2024 is the most underestimated structural fact of the year for the sector. This European text raises the prudential requirements imposed on banks, which can mechanically increase the cost of real estate credit in France. We observe that this topic remains absent from most public analyses, even though it directly conditions households’ financing capacity.
The French model of real estate credit, based on fixed rates and personal guarantees, cushions part of the shock. However, banking institutions have begun to pass on some of the increased capital costs in their margins. For a buyer, the consequence is reflected in the gap between the ECB’s key rate and the rate actually offered at the counter.
The four successive cuts to the European Central Bank’s key rate in 2024 have partially offset this effect. The net result is a better access to credit by the end of the year, with purchasing power gradually restored, particularly in Île-de-France. It is this movement that has allowed for the stabilization of volumes in the second half of the year.
Real Estate Prices in France: Territorial Disparities That the National Average Masks
Thinking in terms of a homogeneous “national market” no longer makes sense. Data from BNP Paribas Economic Research shows that the price decline was more pronounced in the most strained areas between the third quarter of 2022 and the first quarter of 2024. From the second quarter of 2024, prices have generally stabilized in these same areas.
Several elements allow for a better reading of this map by consulting the Novalis website in detail, which compiles recent sector analyses. The southwestern part of the country has experienced some of the most severe contractions, with certain departments such as Gironde, Lot-et-Garonne, Haute-Garonne, or Pyrénées-Orientales recording transaction declines significantly above the national average.
This territorial heterogeneity calls for a nuanced reading of the market:
- Metropolises where remote work has redistributed demand towards suburban areas see their centers lose relative attractiveness, while peripheral rings resist better in price.
- Tourist markets and second homes are experiencing a double effect: rising holding costs (local taxation, energy performance) and a contraction in foreign demand in certain regions.
- Medium-sized cities connected by high-speed trains continue to attract deferred demand, with prices still accessible compared to large urban areas.
Real Estate Innovation 2024: Standardized Data Rather Than Gadgets
Innovation in the sector in 2024 is not limited to virtual tours or generative artificial intelligence. The underlying movement focuses on the standardization and reliability of real estate data, particularly in commercial real estate. Professionals are seeking tools that allow for quick access to comparable information, rather than technological gadgets with no operational impact.
We recommend distinguishing two levels of innovation that have truly progressed this year. The first concerns data aggregation: the ability to centralize on a single platform information from heterogeneous sources (cadastre, notaries, banking data, diagnostics) to produce a consolidated view of an asset or a local market.
The second level pertains to transactional transparency. Real-time tracking tools for prices and volumes, once reserved for institutional players, are becoming more accessible to independent professionals. This evolution changes the balance of power in negotiations and reduces the information asymmetry between sellers and buyers.
New Housing and Taxation: The Structural Blockages of Supply
The crisis of new supply remains the blind spot of the market in 2024. Construction starts have continued to decline, fueled by a convergence of constraints: material costs, strengthened environmental standards, and the scarcity of buildable land in strained areas.
The planned end of the Pinel scheme, which has structured new rental investment for a decade, leaves a gap that existing schemes do not fill at an equivalent scope. The sale in life and furnished rentals, identified as promising segments since late 2023, have confirmed their dynamics in 2024, but they do not meet the same need for new housing production.
From a fiscal perspective, several adjustments have been adopted to combat fraud and more strictly regulate optimization schemes. These measures primarily affect holders of significant real estate assets and real estate investment companies. The gradual increase in holding taxes contributes to changing investors’ choices, who are shifting more towards liquid assets or commercial real estate.
Real Estate Market Outlook: What the Second Half of 2024 Promises
The low point reached in the first half of 2024, followed by a stabilization of volumes in the second half, suggests a scenario of gradual recovery. The Fnaim describes this turnaround as a prerequisite for a recovery in 2025, while not anticipating a rapid return to 2021 levels.
Three parameters will condition the trajectory:
- The continuation or not of the easing of the ECB’s key rates, which determines households’ borrowing capacity.
- The actual impact of the CRR3 regulation on bank margins and thus on the effective rate offered to individuals.
- The ability of public authorities to revive the production of new housing, notably through the simplification of standards and the release of land.
The French real estate market emerges from 2024 restructured by constraint. Transactions are picking up where credit becomes accessible, not where prices have fallen the most. This disjunction between prices and volumes remains the most reliable lens for anticipating the months to come.