French Real Estate Has Reached A Crisis But Not Yet A Crash…*

In the Paris Region, the real estate situation at the end of August 2023 has been reported this past week with the sales of existing homes down 30%!

Unsurprisingly, the real estate market has continued to deteriorate. Without any improvement in the financial climate, and with interest rates continuing to rise, many projects to purchase property were put on hold.

Between June and August 2023, 37,720 existing homes were sold in the Paris region, down 30% from the same period in 2022 (53,610 sales). That’s almost 16,000 fewer homes sold in three months across the region than a year ago. At the same time, the market continues to show a slightly sharper downturn for houses (-33%) than apartments (-28%).

A comparison with the average for the last 10 years confirms the current low level of activity. Sales volumes from June to August 2023 are down 18% on average; 14% for apartments and 26% for houses. Moreover, the deterioration continues to worsen from month to month, with a more severe drop in activity in August than in June.

All market segments in the Paris region are experiencing a sharp drop in sales, with declines ranging from 27% for apartments in Paris to 35% for houses in the inner suburbs. Prices continue to fall by an estimated 5% to 8% in one year, depending on the market in the Paris region. In Ile-de-France, from August 2022 to August 2023, house prices fell by 4.3% in one year.

*Le Monde says that “French real estate has reached a crisis but not yet a crash—After years of boom, the property market is now experiencing a sharp downturn in transactions, due to the rise in lending rates, as well as the beginnings of a decline in prices.” (Source)

The Bank Lending Rate in France decreased to 4.26 percent in August from 4.42 percent in July of 2023. It averaged 2.77 percent from 2003 until 2023, reaching an all time high of 6.29 percent in September of 2008 and a record low of 0.38 percent in April of 2020. (Source: European Central Bank) Compare this with the current U.S. Bank Lending Rate which was reported at 8.5% in October 2023.

What does all this mean in practical terms? If you are a cash buyer, then this is the perfect time to invest in Paris. And even if you are obtaining a French mortgage, the rates are still quite a bit less than they are in the U.S. while the rate of exchange is low at (approximately, as of this writing) 1 euro = 1.066 US dollars.

If you want to consider making a purchase in Paris, don’t hesitate to contact us to get started while the time is right. Visit our website today!

A bientôt,