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Only Nice is an Exception to Property Prices Dropping

Volume XXI, Issue 12

View of Nice Port from a Distance

Barometer: Spring is not here (yet), according to real estate journalist Karin Scherhag writing for MeilleursAgents.com in a recent article.

MeilleursAgents.com's property barometer

“The return of sunny days over a large part of France can be misleading,” she writes. Prices continue to fall and credit for buyers has collapsed, however, Karin believes there is a glimmer of hope thanks to the gradual shortening of sale times.

Last month, their barometer reported a very harsh winter with real estate prices stagnating in major cities, with Paris and the Île-de-France plunging, and even rural areas at half-mast. Unfortunately, the imminent approach of spring does not seem to be shaking up this somewhat gloomy trend. Since the beginning of January, property prices have fallen by an average of 0.2% nationwide.

Even more striking, since the end of 2022, all market segments have fallen into the red. This is an extremely rare phenomenon that has not been observed for 14 years! While property prices in Paris continue to fall (-0.4% in one month), the same is now true in the other ten largest cities in France (-0.4%), but also in the Top 50 (-0.1%). Even the rural areas, which have carried the French market since the start of the pandemic in 2020, show a further decline this month (-0.4%).

Map showing property price drops in larger cities in France

The month of February should have brought the first signs of spring, but it didn’t happen that way. The winter of 2023 was much harsher and longer than we expected. (Do we have Global Warming to thank for the cold snap?) The first to suffer were the big French metropolises, already weakened by the health crisis.

Marseille, which until now has experienced spectacular growth (+11.2% in one year), also recorded a 0.4% decline in February. The prize for the biggest drop is shared by Lyon and Nantes, which have both seen their prices fall by 1% in one month and by more than 2% since the beginning of the year (-2.4% in the Rhône prefecture and -2.2% in the Loire-Atlantique prefecture).

In this slump, only Nice is an exception, as it was last month, with property prices up 0.7% since February 1. I am not surprised.


Available funds is a big problem. In December 2022, French banks granted 30% fewer loans compared to December 2021, according to data from the Banque de France. Some point the finger at the usury rate that would complicate access to credit. Unfortunately, the monthly revaluation of this rate, which will not happen until next July, should not change the situation.

Admittedly, this decision appears to be good news for certain files that were blocked by this borrower protection mechanism. However, the rapid rise in interest rates that is expected will have consequences on the solvency of many would-be buyers, who will automatically find themselves excluded from credit.

As a reminder, in countries such as Belgium or Germany where this usury rate system does not exist, interest rates on 20-year loans have risen by 2.5 and 2 points respectively between January 2022 and January 2023, compared with only 1.5 points in France during the same period. The risk?…a sudden rise in borrowing rates since the announcement of changes to the calculation of the usury rate. Long considered as a worst-case scenario, an interest rate of 4% over 20 years by the end of 2023 is now more than plausible.

Above all, banks will remain as cautious as ever in a turbulent economic environment (notably higher than expected inflation). This is evidenced by the situation in Belgium and Germany where, despite the absence of the usury rate system, loan issuance has also been drastically revised downwards (respectively -36% and -43% from monthly figures between December 2021 and December 2022).

In France, the volume of home loans could quickly return to its pre-2016 level, and implement the policy of the European Central Bank, which supported the economic system for nearly seven years. If this were to be the case, it would have an impact on the number of transactions this year, which would undoubtedly fall below the symbolic one million mark.

In the main French cities, these hard times are gradually becoming shorter. Since November, it has taken an average of one week or less to complete a transaction, with four days gained in February alone. This is a positive signal for the real estate market, which shows that there is still a desire to buy and that some sellers are willing to adjust their prices downwards without delay. This even augurs the arrival of a real estate spring, albeit later and more timid than usual.

Despite an overall context of decreasing prices and volumes, some would-be buyers should make their dream of buying a property in France a reality this Spring!

Bottom line: now is the time to buy!

A bientôt,

Adrian LeedsAdrian Leeds
Adrian Leeds Group®

Promotional for Apres-Midi NiceP.S. Later today will be our first Après-Midi in Nice…with many more to come! Be sure to read the report in Monday’s Nouvellettre®. See our site for more information.


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