Will 2024 be a good year to buy property in France?
Whether you are looking to move house, buy or sell property in France in 2024, here is what you can expect from the property market.
After what French real estate professionals are calling an 'annus horribilis', there is some hope that the situation will improve in 2024.
In the past year, French notaries have noted a significant drop in property transactions - between 850,000 to 890,000 - in comparison to over 1.13 million in 2022.
On top of that, the number of new build sales significantly decreased - a year-on-year drop of 31.3 percent between June 2023 and 2022.
From the cost of living crisis and high interest rates, there were several problems to blame for the slowdown in France's real estate market in 2023.
As for 2024, experts are expecting a brighter picture.
Interest rates
Accessing a mortgage was particularly difficult in 2023, due to soaring interest rates and strict loan requirements.
As of November 2023, average interest rates for 20-year mortgages had gone up to 4.3 percent, a huge jump from February 2022, when rates were as low as 1.1 percent.
France's council for financial stability also issued new rules in 2022 requiring that repayments – including insurance charges – must not exceed 35 percent of income, and borrowers must take on a loan with a maximum of 25 years, or 27 years in certain cases.
READ MORE: French property: How to get a mortgage in France
As a result, the number of mortgages granted dropped by 43.5 percent when comparing October 2023 with the year previous, according to France's Housing and Credit Observatory.
In 2024, most experts expect rates to finally stabilise, as a result of inflation slowing down and the European Central Bank (ECB), who chose to pause rate hikes in late October 2023 following 10-consecutive increases since mid-2022.
As of mid-December, François Villeroy de Galhau, the governor of the Bank of France and an ECB member, said that "the lowering of interest rates should happen some time in 2024", according to reporting by Reuters.
The Union of Credit Intermediaries told French television channel BFMTV that they predict that interest rates in France will reach a high point (potentially around 5 percent) in January or February 2024, before they begin a slow decline, eventually stabilising around 4 percent by the end of 2024.
Others, like macroeconomics analyst Gurpreet Gill with Goldman Sachs Asset management, forecast that lower interest rates could become available by the summer. Gill told Capital FR, that "given the downward trend in activity and inflation, the ECB should start reducing its rates in June."
Ultimately, lower rates for households looking to access mortgages will likely depend on when and if the ECB decides to drop rates, which would be a signal for banks to allow greater access to credit and lower their own rates.
However, the decision by the ECB will depend on various factors, including inflation expectations. As of December, Villeroy predicted to Reuters that France would see "inflation drop down to two percent by 2025 at the very latest." In 2023, inflation averaged at 5.7 percent in France.
Eric Dior, economist and Director of Studies at the IESEG School of Management, told Capital Fr that normally it works like this: "If I'm a bank, the rates I charge are not the same if I know that ECB rates are set to fall. This normally stops any tightening of lending conditions."
Property prices
The property website Meilleurs Agents expects average property prices in France to fall by around 4 percent in 2024, though the changes could vary greatly from one area to another.
According to Nexity, another French property website, cities like Bordeaux and Lyon could see more pronounced changes, with average prices expected to fall by 8.6 percent and 8.1 percent respectively.
The western French cities of Nantes and Rennes are also predicted to see decreases of around 5.1 and 2.6 percent, respectively.
As for the Paris region, property prices are expected to drop at varying amounts based on location. Inside the capital, decreases could be as much as 5.3 percent, while experts expect prices to go down by 4.6 percent and 3.4 percent in the inner and outer suburbs respectively.
In the past year, Paris has seen prices go down by 5.4 percent, and in September the average price per metre square fell below €10,000 for the first time since 2019.
Nevertheless, some of these areas are already known for having high property prices. As of autumn 2023, the cities with the most expensive property (aside from Paris) were Nice (€6,546 per squared metre), Aix-en-Provence (€6,139), Lyon (€5,219) and Bordeaux (€4,853).
Conversely, some cities - like Marseille and Nice - are predicted to see prices rise in 2024, by 6.3 and 2.3 percent respectively.
Several of these trends were already visible as of October 2023, when the BFM Business and the real-estate listings website, Bien'Ici, released a study showing the latest trends in the French property market.
It clarified that cities like Marseille have long been undervalued and that rising prices in the city simply reflect the market balancing itself out.
The experts explained why housing prices are dropping, noting that the dramatic declines follow a period of housing market inflation that came after the Covid pandemic.
Finally, the study found that the overall trend, in the past year, has been for housing prices to fall fastest in medium-sized towns and cities.
READ MORE: 5 towns in south-west France within easy travel distance of Paris
Property taxes
House prices are not the only variable when looking at whether to buy property in France 2024 - taxes also play an important role.
In France, there are two main types of property taxes: taxe fonçiere (paid by all property owners in France) and the taxe d'habitation, which is now only charged if the property is your second home.
READ MORE: Explained: Is your French property a main residence or a second home (and why it matters)?
All property-owners across France saw a 7.1 percent increase in their taxe foncière in 2023 due to inflation. However, local authorities also have the power to increase their rates further up to a maximum of 60 percent.
As for 2024, you can expect your taxe foncière to at least increase with inflation, in addition to whatever rate your area decides to apply. These are the areas where property taxes increased the most in 2023.
Second-home owners will also pay taxe d'habitation - in 2022, the average bill was €772 per year.
Local authorities in areas with housing shortages (zones tendues) also have the power to impose a surcharge on taxe d'habitation for second-homes of up to 60 percent, which could increase your bill by several hundred euro in 2024 if applied.
The French government also registered several new areas as zones tendues, which went into effect at the start of 2024.
Grants and government aid
People looking to buy or refurbish property in France can be eligible for certain aid from the French government. However, these grants are often means-tested, which means residency is required to apply.
There is one notable change to the government's Prêt à taux zéro (PTZ) scheme - which is a supplementary interest-free loan that can be used to finance part of the purchase of a home, usually in addition to a mortgage.
It is aimed at first-time home buyers or those who have not owned their primary residence for at least two years, though there are some exceptions namely for people with disabilities.
Starting in 2024, the French government announced that, as part of its 2024 budget, it will extend the caps on the interest-free loan scheme and keep it in place until 2027, even though it was intended to end in 2023.
While the scheme will remain means-tested, maximum salaries for eligible parties will also increased making it more available to middle income households. An estimated 6 million more households will become eligible for the interest-free loan in 2024.
READ MORE: GUIDE: French property grants you might be eligible for
Changes for second-home owners
If you own a home in France but you only spend a few months a year here, there are some other changes you should be aware of in 2024.
The first is the roll out of the EU's new Entry and Exit System (EES), which has a provisional start date of October. This will affect anyone travelling to France from a non-EU or Schengen zone country.
It is meant to tighten up border security, but it could lead to longer waits for travellers.
READ MORE: How the EU's EES and ETIAS border systems will affect foreigners in France
Secondly, French MPs passed an immigration law in December which includes a clause that could potentially exempt British second-home owners from post-Brexit visa rules.
While the details of this are not yet clear, it could have a significant impact on Brits who own property in France.
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After what French real estate professionals are calling an 'annus horribilis', there is some hope that the situation will improve in 2024.
In the past year, French notaries have noted a significant drop in property transactions - between 850,000 to 890,000 - in comparison to over 1.13 million in 2022.
On top of that, the number of new build sales significantly decreased - a year-on-year drop of 31.3 percent between June 2023 and 2022.
From the cost of living crisis and high interest rates, there were several problems to blame for the slowdown in France's real estate market in 2023.
As for 2024, experts are expecting a brighter picture.
Interest rates
Accessing a mortgage was particularly difficult in 2023, due to soaring interest rates and strict loan requirements.
As of November 2023, average interest rates for 20-year mortgages had gone up to 4.3 percent, a huge jump from February 2022, when rates were as low as 1.1 percent.
France's council for financial stability also issued new rules in 2022 requiring that repayments – including insurance charges – must not exceed 35 percent of income, and borrowers must take on a loan with a maximum of 25 years, or 27 years in certain cases.
READ MORE: French property: How to get a mortgage in France
As a result, the number of mortgages granted dropped by 43.5 percent when comparing October 2023 with the year previous, according to France's Housing and Credit Observatory.
In 2024, most experts expect rates to finally stabilise, as a result of inflation slowing down and the European Central Bank (ECB), who chose to pause rate hikes in late October 2023 following 10-consecutive increases since mid-2022.
As of mid-December, François Villeroy de Galhau, the governor of the Bank of France and an ECB member, said that "the lowering of interest rates should happen some time in 2024", according to reporting by Reuters.
The Union of Credit Intermediaries told French television channel BFMTV that they predict that interest rates in France will reach a high point (potentially around 5 percent) in January or February 2024, before they begin a slow decline, eventually stabilising around 4 percent by the end of 2024.
Others, like macroeconomics analyst Gurpreet Gill with Goldman Sachs Asset management, forecast that lower interest rates could become available by the summer. Gill told Capital FR, that "given the downward trend in activity and inflation, the ECB should start reducing its rates in June."
Ultimately, lower rates for households looking to access mortgages will likely depend on when and if the ECB decides to drop rates, which would be a signal for banks to allow greater access to credit and lower their own rates.
However, the decision by the ECB will depend on various factors, including inflation expectations. As of December, Villeroy predicted to Reuters that France would see "inflation drop down to two percent by 2025 at the very latest." In 2023, inflation averaged at 5.7 percent in France.
Eric Dior, economist and Director of Studies at the IESEG School of Management, told Capital Fr that normally it works like this: "If I'm a bank, the rates I charge are not the same if I know that ECB rates are set to fall. This normally stops any tightening of lending conditions."
Property prices
The property website Meilleurs Agents expects average property prices in France to fall by around 4 percent in 2024, though the changes could vary greatly from one area to another.
According to Nexity, another French property website, cities like Bordeaux and Lyon could see more pronounced changes, with average prices expected to fall by 8.6 percent and 8.1 percent respectively.
The western French cities of Nantes and Rennes are also predicted to see decreases of around 5.1 and 2.6 percent, respectively.
As for the Paris region, property prices are expected to drop at varying amounts based on location. Inside the capital, decreases could be as much as 5.3 percent, while experts expect prices to go down by 4.6 percent and 3.4 percent in the inner and outer suburbs respectively.
In the past year, Paris has seen prices go down by 5.4 percent, and in September the average price per metre square fell below €10,000 for the first time since 2019.
Nevertheless, some of these areas are already known for having high property prices. As of autumn 2023, the cities with the most expensive property (aside from Paris) were Nice (€6,546 per squared metre), Aix-en-Provence (€6,139), Lyon (€5,219) and Bordeaux (€4,853).
Conversely, some cities - like Marseille and Nice - are predicted to see prices rise in 2024, by 6.3 and 2.3 percent respectively.
Several of these trends were already visible as of October 2023, when the BFM Business and the real-estate listings website, Bien'Ici, released a study showing the latest trends in the French property market.
It clarified that cities like Marseille have long been undervalued and that rising prices in the city simply reflect the market balancing itself out.
The experts explained why housing prices are dropping, noting that the dramatic declines follow a period of housing market inflation that came after the Covid pandemic.
Finally, the study found that the overall trend, in the past year, has been for housing prices to fall fastest in medium-sized towns and cities.
READ MORE: 5 towns in south-west France within easy travel distance of Paris
Property taxes
House prices are not the only variable when looking at whether to buy property in France 2024 - taxes also play an important role.
In France, there are two main types of property taxes: taxe fonçiere (paid by all property owners in France) and the taxe d'habitation, which is now only charged if the property is your second home.
READ MORE: Explained: Is your French property a main residence or a second home (and why it matters)?
All property-owners across France saw a 7.1 percent increase in their taxe foncière in 2023 due to inflation. However, local authorities also have the power to increase their rates further up to a maximum of 60 percent.
As for 2024, you can expect your taxe foncière to at least increase with inflation, in addition to whatever rate your area decides to apply. These are the areas where property taxes increased the most in 2023.
Second-home owners will also pay taxe d'habitation - in 2022, the average bill was €772 per year.
Local authorities in areas with housing shortages (zones tendues) also have the power to impose a surcharge on taxe d'habitation for second-homes of up to 60 percent, which could increase your bill by several hundred euro in 2024 if applied.
The French government also registered several new areas as zones tendues, which went into effect at the start of 2024.
Grants and government aid
People looking to buy or refurbish property in France can be eligible for certain aid from the French government. However, these grants are often means-tested, which means residency is required to apply.
There is one notable change to the government's Prêt à taux zéro (PTZ) scheme - which is a supplementary interest-free loan that can be used to finance part of the purchase of a home, usually in addition to a mortgage.
It is aimed at first-time home buyers or those who have not owned their primary residence for at least two years, though there are some exceptions namely for people with disabilities.
Starting in 2024, the French government announced that, as part of its 2024 budget, it will extend the caps on the interest-free loan scheme and keep it in place until 2027, even though it was intended to end in 2023.
While the scheme will remain means-tested, maximum salaries for eligible parties will also increased making it more available to middle income households. An estimated 6 million more households will become eligible for the interest-free loan in 2024.
READ MORE: GUIDE: French property grants you might be eligible for
Changes for second-home owners
If you own a home in France but you only spend a few months a year here, there are some other changes you should be aware of in 2024.
The first is the roll out of the EU's new Entry and Exit System (EES), which has a provisional start date of October. This will affect anyone travelling to France from a non-EU or Schengen zone country.
It is meant to tighten up border security, but it could lead to longer waits for travellers.
READ MORE: How the EU's EES and ETIAS border systems will affect foreigners in France
Secondly, French MPs passed an immigration law in December which includes a clause that could potentially exempt British second-home owners from post-Brexit visa rules.
While the details of this are not yet clear, it could have a significant impact on Brits who own property in France.
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