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The French real estate market has experienced significatives fluctuations in recent years. This analysis looks at the main trends observed, including the drop in purchasing intentions among households, variations in real estate transactions and recent signs of stabilization.
The evolution of household purchasing intentions
Since the beginning of 2022, the intention to buy a house among French households has fallen sharply. According to INSEE data, only 7% of households plan to purchase real estate in the next 12 months in June 2024, down four points from January 2022.
Factors influencing the decline
Several factors contributed to this drop in purchasing intentions:
- Increase in interest rates: Rising mortgage rates since early 2022 have made buying a home more expensive, prompting many potential buyers to postpone or abandon their plans.
- Economic uncertainty: Uncertainty surrounding the French economy, partly due to recent European political events, has also played a role in households’ reluctance to invest in real estate.
Impact on the volume of real estate transactions
The decrease in purchasing intentions has naturally translated into a significant reduction in the number of real estate transactions.
Decline in transactions and launch of new projects
We observe a drop of more than 11% of real estate transactions over the past two years. In addition, new housing starts have fallen by about 30% since the beginning of the year.
Divergence between owners and tenants
Purchase intentions vary considerably depending on whether households own or rent.
Trends among tenants
Among renters, purchase intentions fell by five points between 2021 and 2024. Traditionally, renters represent a significant share of potential buyers, but this trend shows a marked decrease of their participation in the market.
Owners’ behavior
In an unprecedented move, purchase intentions among households that already own their own homes have temporarily surpassed those of renters, illustrating a notable change in the dynamics of the real estate market.
Fluctuating interest of younger generations
Young adults, traditionally a driving force in the housing market, are also showing a decline in engagement in home purchases.
Slowdown in intentions among young people
The percentage of young people intending to buy a home fell from 23% in 2021 to 15% in 2024, reflecting a general trend of disengagement in the face of current economic challenges.
Signs of market stabilization
Despite the various observed declines, INSEE notes a certain stabilization of purchasing intentions since mid-2023.
Recovery expected
With the slight decrease in interest rates starting in 2024, it is anticipated that the real estate market could soon emerge from its current torpor, thus offering hope for the sector in the coming months.
In summary, the French real estate market is currently marked by a overall decline in purchasing intentions and a decline in transaction volume. However, some recent signs of stabilization allow us to envisage a possible recovery. It remains crucial for market participants to closely monitor economic and political developments that will continue to shape these trends.
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