
French property market: what notaires and experts expect for 2023
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French property prices have been stabilising after several boom years and a slight drop is now likely. However, contrary to fears across the Channel, no serious price crash is expected, say
experts. Eric Allouche, CEO of ERA Immobilier France, which has 500 agencies, said: “I am not pessimistic about the market. Property is still attractive and that is not going to change. We
have started a period of stabilisation or slight lowering.” READ MORE: WHY FRENCH PROPERTY PRICES ARE EXPECTED TO FALL 5-10% IN 2023 READ MORE: MAP: LATEST HOUSE PRICE RISES IN FRANCE - HOW
HAS YOUR AREA FARED? SALES BACK TO A ‘NORMAL’ LEVEL Century 21 predicts an average potential lowering of 5-7% in 2023. However, agencies agree there are too many unpredictable factors to
speak with confidence for the long term. Notaire data for 2022 shows just over 1,100,000 sales, a 6% drop on 2021 but still the second-highest yet, 2021 having been a record. Edouard
Grimond, property spokesman for the notaires’ professional body CSN, said they expect sales volumes to continue to lower. “It is not a collapse or crash. We’ve had constant increases in the
last four or five years but at some point this had to stop. We’re perhaps coming back to a more ‘normal’ level. “In a few areas, prices are still rising slightly. In others, there is
stagnation or they are just starting to drop. “The reduction in sales and the increase in interest rates and inflation have not caused heavy falls in selling price.” Generally, however,
fewer sales means more homes remaining on the market, so it is natural for prices to lower. Sales of around one million are likely this year, said Mr Allouche. This compares to around
900,000 five years ago. “Prices went up a lot, so if these drop down a little again, it is not a catastrophe.” ENERGY-EFFICIENCY IS BECOMING MORE IMPORTANT Century 21 says people are more
worried about “what there will be left to live on” after accommodation-related costs. So they are looking more closely at DPE energy-efficiency checks, and a Covid-years trend of prices
rising more for houses than flats as people sought space and greenery is reversing, with buyers more wary of the costs of maintaining a house. READ MORE: 10 QUESTIONS ABOUT FRANCE’S NEW
ENERGY AUDITS FOR HOMES “Often when there is a strong trend, there is a rebound in the other direction when things change,” ERA’s Mr Allouche said. Rural areas are more affected than towns
by this as they have more houses. However, prices are also expected to fall more than average this year in certain cities which have seen steep rises. This includes Paris, though property
there remains a solid long-term investment, said Mr Allouche. Mr Grimond said Paris was the first to see price falls, with Lyon, Bordeaux, Nantes and Lille now affected. Rennes, however, has
for now continued to show year-on-year rises of around 5% and the picture was similar in Nice. In coastal areas such as Brittany and Loire-Atlantique, price rises for second-home
properties, or even main homes to be used for home-working due to demand from Parisians after Covid lockdowns, have eased, Mr Grimond said. BUYERS WILL HAGGLE IF PROPERTY NEEDS
ENERGY-EFFICIENCY UPGRADES As houses are often harder to keep heated than flats, it is worth carrying out renovations, so buyers should consider if they need to budget for insulation or
replacing oil-fired heating with a heat pump, advised Mr Allouche. He said renewable-energy heating systems are often good value to run. “Some rural ‘character’ homes are hard to renovate
but retain a certain cachet and charm. “Perhaps you could install a wood-burning heater, which is not too expensive and has high energy-efficiency.” The biggest problem, he said, is for
homes no longer deemed ‘decent’ to rent out. “You can, however, buy one of these properties to live in. In which case, we still advise buyers to consider renovations to avoid their property
losing value because it doesn’t meet the standards. “And sellers of these should expect buyers to negotiate, or should otherwise consider works to sell for more. Some sellers will accept a
reduction to move on and let the buyer undertake the renovation work.” READ MORE: FRENCH ECO-RENOVATION GRANTS INCREASE AS PRICE OF MATERIALS RISES BUYERS IN FRANCE PROTECTED FROM STEEP
INTEREST RATE RISES Mr Allouche said the overall picture is good, with inflation contained (around 6% year on year) compared to many countries. He added that ‘anxiety-inducing’ factors such
as the war in Ukraine or pension strikes can encourage people to buy property for a sense of stability. The inflation rise has seen interest rates double in a year to around 3-3.5%,
including insurance against death and incapacity, but these are capped by France’s taux d’usure, above which the cost of borrowing may not rise. This cap can “act as a brake on a rise which
could dissuade buyers who might think buying will cost too much”. The cap is currently around 3.5% – up a percentage point on last year. It is to be revised monthly, as opposed to
quarterly, for the next six months. This greater flexibility might enable banks to agree to more loans – for example, to those with smaller deposits. FIXED-RATE MORTGAGES GIVE BUYERS
CONFIDENCE French banks also still mostly offer fixed rates, which are ‘safer’ than the variable rates common in the UK and US. “You can then get the situation we saw in the US with the
subprime crisis where rates rose and borrowers could not repay loans. Buying at a fixed rate helps safeguard your money. “If I borrow now for 20 years my monthly payments will stay the same
whereas inflation could mean if I buy in five years, I won’t be able to borrow as much – and prices may have risen.” Some bankers predict rates could rise to 6% (including insurance) by the
end of the year. Mr Allouche said this was possible but is probably an overestimate. “Interest will continue to follow the inflation rate, so if it rises, for sure the rates will rise, but
there are signs that inflation is easing.” ‘EXPECT TO NEGOTIATE AROUND 6% ON ASKING PRICE’ He said sellers should listen to their agents, who can provide a realistic price estimate based on
objective factors, not just “a feeling”. “If you price too high, you risk not selling, or if the market drops, selling later for less.” READ MORE: PROPERTY PRICE NEGOTIATION IN FRANCE: WHAT
IS AVERAGE NEAR YOU? Philippe Buyens, managing director of the Capifrance group, told BFM Business the market was holding up well, with sellers loath to lower prices below what they consider
their homes are worth. There is, however, more negotiation now, he said, “but that is how it used to be. We have tended to forget because 2021 and 2022 were unusual”. Buyers can expect to
negotiate around 6% on average from selling prices, a market ‘barometer’ by online property specialist LPI and SeLoger says. Gérard Hidskes, of the Valora agency in Ribérac, Dordogne, said
in 2021 “everyone wanted to rush from town to buy houses in the country”. This has died back but not everyone realises. “I had a house on sale for €600,000 and the owners took it back last
year and gave it to another agency who said it could sell it for €750,000. Now it is back at €600,000.” Mr Hidskes also had two young couples whose purchases were delayed because of banks
having problems with the taux d’usure. “I think they will get loans eventually but it shows how things can slow down and why volumes are dropping.” BRITISH BUYERS REPLACED BY FRENCH
POST-BREXIT Holiday home sales and northern Europeans moving to France are continuing, but “perhaps with fewer British people”. “The post-Covid rush has gone but it is still a dream for
many. The market is not racing but it is ticking along.” Robert Welton, of Bel Air Homes, Brittany said: “There has been a slight slowdown since summer 2022 but houses are still selling. At
the worst I expect prices to be flat at the 2022 levels. There are not many properties on the market but there are still buyers.” Mr Welton said British buyers, either of second homes or new
residents, make up around a quarter of his business, down from around 45% before the Brexit vote, but their place has been taken by French buyers. Belgians and Dutch, with a few Germans and
Italians, made up around 20% of buyers, which has not changed. ‘PRICES WILL NOT FALL ENOUGH TO MAKE WAITING WORTHWHILE’ “We are optimistic and just don’t see the gloom we see on
television,” he said. For those thinking of buying, delaying for lower prices later is “not a good approach”, according to Mr Allouche. “Imagine you borrow €180,000 at 3% with €1,000 to pay
per month for 20 years, after which time the loan will have cost you €60,000. If rates reach 6%, it will cost you twice as much, €120,000. “So prices would really have to fall a lot to make
it worthwhile and I do not see that happening in the coming months.” RELATED ARTICLES ENERGY AUDITS, TAX, GRANTS: WHAT IS NEW FOR PROPERTY IN FRANCE IN 2023 ALL OWNERS OF FRENCH PROPERTIES
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