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A buyer’s market? How French property prices are set to fall in 2023

The outlook for the French property market for buyers depends heavily on what kind of home you are looking for and where in France you want to live, but prices are set to fall in many places.

A buyer's market? How French property prices are set to fall in 2023
(Photo by PHILIPPE HUGUEN / AFP)

Property prices in France appear to have peaked, with some experts predicting falls of up to 10 percent in some regions in 2023, though new-build prices continue to rise.

But, with interest rates rising, even discounted property prices may not be enough to tempt buyers in the short term – the number of mortgages approved in October was down 40 percent on the previous month, with the higher cost of borrowing blamed for the marked dip.

Immobiliers (real estate agents) across the country have factored in falling prices for existing properties next year as supply outstrips demand. The Fédération Nationale de l’Immobilier (FNAIM) predicts a 5 percent average decline in property prices in 2023 – with larger cities bearing the brunt of the decline after years of rocketing prices. Over the past three years, older properties have seen price rises, on average of 23 percent, according to data from national statistics provider Insee.

Rising interest rates and a fall in the number of properties under construction, however, leads property experts to believe that the cost of new-build properties in France will continue to rise in the medium term.

In the year to November, the square-metre cost of a new-build property rose 5.7 percent, according to the Laboratoire de l’immobilier. In the past three years, new-build property prices have jumped 18 percent.

The boss of the L’Adresse network of agencies predicts a drop could be as high as 10 percent. The Laforêt chain currently forecasts a more modest two or three percent fall. 

In fact, prices are already falling in Paris, Lyon and Nantes, while the market in and around Bordeaux has stagnated, according to agents.

Notaires, too, have seen a drop in property purchases in 2022, and expect the market to dip to 2020 levels of about 1million sales, compared to 1.2million in 2021.

In Paris, prices are already falling down nearly 2 percent year-on-year to October, according to Fnaim – a situation unlikely to be helped by the expected 50 percent hike in property taxes.

In Lyon, Toulouse, Nantes, too, prices are dropping while they have stagnated in Bordeaux, Fnaim added. 

It said that difficulties in accessing borrowing will inevitably end up forcing sellers to lower prices.

The reason – oversupply. For the first time since Covid-19, the Bien’ici property site has noted a sharp increase in supply – with an jump of 12 percent in property for sale year-on-year and, at the same time, a sharp drop in demand, with searches dropping 15 percent on average, and 29 percent in searches specifically for houses.

In Ile-de-France, sales volumes fell seven percent year-on-year to July, notaires in the region noted, as sellers try to hang on to high prices and buyers adopt a more cautious, wait-and-see approach. As a result, on-market properties have jumped eight percent.

According to Bien’ici, meanwhile, property ads are online for longer – 60.2 days on average recently, compared to 48.8 days in the middle of 2021.

Demand is down 12 percent in Centre-Val de Loire, while properties on offer rose. In Nouvelle Aquitaine, Bien’ici noted a 23 percent increase in the number of properties for sale, but also a 10 percent fall in searches.

Prices are falling, too, in a number of Brittany departments, but falls – Notaires de Bretagne has said – are mainly confined to larger urban areas. Rural Brittany is currently unaffected by the downturn, notaire Vincent Lemée told Ouest France.

In Occitanie, however, prices are continuing to rise, for now, notably in the Aude around Carcassonne, according to notaires. In general in the south-western region, the price of older, established houses rose nearly five percent on average.

Member comments

  1. Normandy under 100,000 euro, old property around Vernon, already modernised inside, and ready to move into.

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PROPERTY

Bail mobilité: How France’s short-term rental contracts work

If you're after a short-term rental in France you might be offered a 'bail mobilité' (mobility lease) - here's how these work and whether they're a good deal.

Bail mobilité: How France's short-term rental contracts work

The bail mobilité is a relatively recent invention in France. It was created by the Elan law in 2018 and is a rental contract intended for people who have a temporary need for housing due to their professional activity – whether that be a work transfer, temporary posting, or status as a student. 

In order to qualify, the tenant must show proof that at the beginning of the lease they are in one of the following approved situations: enrolled in professional training or higher education, completing an apprenticeship or internship, on a temporary posting or having received a work transfer, or working as a volunteer as “part of a civic service.”

You can find more specific information about these situations on the French government website HERE

This essentially means that if you are visiting France for an extended period of time for tourism purposes, you likely would not be able to rent using a bail mobilité. This might be a source of confusion for those who see these lease arrangements advertised on websites such as Airbnb (more on this below). 

There are some rules that lodgings listed as “mobility leases” must follow. They must always be furnished rentals – meaning they are required to provide the tenant with specific items such as bedding, dishes, and other things. You can learn more HERE.

READ MORE: Renting property in France: Should I go for furnished or unfurnished?

Next, the lease itself must be between one to ten months. It cannot exceed ten months. Additionally, mobility leases cannot be renewed. If the tenant and landlord want to renew the rental, it will have to be within the context of a standard furnished rental contract.

With a mobility lease, the owner is not allowed to ask the renter for a security deposit (dépôt de garantie). However, they do have the right to request a guarantor (un garant, or sometimes referred to as a caution). 

In terms of the actual lease itself, it must include certain documents, similar to a standard furnished rental contract. The lease must include an inventory of fixtures (état des lieux), the technical diagnostic file (this includes the energy rating, for example), and if the property is located in a condominium or apartment building, then the regulations concerning common areas. 

The tenant retains the right to move out at any time during the lease – as long as they give one month’s notice to the owner (or the real estate company if the accommodation is managed by an agency). Typically, this is done via registered letter (lettre recommandée) with acknowledgement of receipt.

On the other hand, the landlord cannot terminate the lease before the end date (unless the tenant does not respect their obligations, such as paying rent). 

When it comes to determining the rental price of a dwelling listed under a bail mobilité, the landlord can set the rent by their own standards, as long as the lodging is not located in a zone tendue (housing shortage area) and therefore is not bound by local rent caps. However, rent cannot be revised during the lease and it should be listed within the rental contract.

Finally, if the property is being rented to more than one person (a colocation), the lease cannot require the roomates to have a “solidarity clause.” This is a part of the lease that would outline the requirement of the co-tenant(s) to pay the rents even if another co-tenant gives notice and moves out. Typically, this would also outline when that expectation for the other tenant(s) to cover remaining rents would end. 

Common questions about mobility leases

First, the bail mobilité is often confused with the “secondary-residence lease.” The two differ primarily due to the fact that a mobility lease can constitute a primary residence, depending on the duration of the lease.

The next common question regarding mobility leases is whether it is possible to rent one via an online rental platform, such as Airbnb. The short answer is – yes. However, as mentioned before, the bail mobilité is only available to specific groups of people.

Renting with a mobility lease absolves the requirement to pay the ‘tourist tax’ (taxe de séjour) in certain cities – as it is a residential lease and not a tourist accommodation. The tourist tax is automatically added to Airbnb charges, but in certain French cities such as Paris, Lyon, Bordeaux, Toulouse, Nantes, Lille Nice, Strasbourg, and Marseille, booking with a mobility lease automatically exempts the renter form paying the tourist tax. 

READ MORE: What are the rules on renting out French property on Airbnb?

In other parts of France, people signing mobility leases via Airbnb may be charged a tourist tax, but this can be refunded by request at the local town hall. 

Additionally, renting a property under a mobility lease exempts the owner from having to do a “change of use” declaration with the town hall, as the property will technically continue being used as residential accommodation, rather than touristic. This authorisation is mandatory for furnished tourist accommodation in many French cities.

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