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What will happen in France’s real estate market? Will prices go up or down? Is Paris still a hotspot for foreign investors? How is France’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in France, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property prices in France will stay unpredictable because of economic ups and downs
Property prices in France have been on a wild ride, and this trend is set to continue.
One reason for this is the country's sluggish economic growth. For example, France's GDP growth is projected to be just 1.1% in 2024, dipping to 0.9% in 2025. This slow pace can make people hesitant to invest in real estate, as a booming economy usually boosts confidence in property investments.
Interest rates are another factor shaking things up. The European Central Bank (ECB) raised rates from 2022 to mid-2024, causing mortgage rates in France to climb. Imagine the average interest rate on new housing loans jumping from 1.14% to 3.50% by March 2024. Even if the ECB cuts rates, French mortgage rates might stay high due to the country's debt issues, making borrowing more expensive and affecting homebuyers.
Foreign investors are also influencing the market. Cities like Paris, Lyon, and Nice are hot spots for investors from China, the U.S., and the Middle East. They're snapping up quality properties, which can drive up demand and prices. But this demand is unpredictable, swayed by global economic conditions and investor confidence.
Regional price differences add to the complexity. In Paris, the North, and along the Atlantic coast, house prices are expected to drop significantly, with some areas seeing declines of between 7% and 15%. These variations make it tough to predict overall market trends, as each region dances to its own tune.
Sources: Global Property Guide, Paris Perfect, Agence Etoile, OECD Economic Outlook, Long Term Rentals in France
2) Rental yields in Paris will drop as property prices rise faster than rents
In Paris, property prices are climbing faster than rents, especially noticeable in 2023 and 2024.
Over the past few years, property prices in Paris have been on a steady rise, with annual increases ranging from 4% to 7% between 2018 and 2023. Meanwhile, rent hikes have lagged behind. For instance, in 2022, the real estate market felt the pinch of higher interest rates and inflation, which further slowed rent growth. This gap means that while buying a property is getting pricier, the rental income isn't catching up.
Paris's rental market is also grappling with a supply-demand mismatch. From January 2021 to September 2024, the rental supply plummeted by 55%, while demand doubled. This has nudged rents higher, but not enough to keep pace with the soaring property prices. Consequently, rental yields are taking a hit because the cost of buying property is outstripping potential rental income.
For those considering investing in Parisian real estate, it's crucial to understand that the rental yield, or the return on investment from renting out a property, hinges on both the property's price and the rent it can generate. With property prices rising faster than rents, the yield is shrinking. This trend is particularly evident in popular neighborhoods where demand is high, yet rent increases remain modest.
Insider tip: some areas in Paris, like the trendy Marais or the bustling Latin Quarter, are seeing a surge in property prices due to their desirability. However, the rental income in these areas isn't increasing at the same rate, making it challenging to achieve high rental yields. Investors should weigh the potential for capital appreciation against the current rental yield.
In summary, while Paris remains a coveted location for property investment, the current market dynamics suggest that rental yields may continue to decline as property prices outpace rent increases. This is a key consideration for anyone looking to invest in the Parisian real estate market.
Sources: Paris Perfect, NSS Magazine, Global Property Guide
In this video, experts discuss why rental yields in Paris are declining, citing high property prices and additional costs as significant contributors.
3) Rental yields in rural areas will drop as population density falls
Rural areas in France are seeing a decline in rental yields due to decreasing population density.
From 2015 to 2020, the population in these areas dropped by 3.5%, as reported by INSEE. This decline is partly because many people are moving to cities. In just one year, from 2019 to 2020, 1.4 million people left rural areas for urban ones. This shift is largely driven by younger folks seeking better job prospects and more vibrant cultural scenes, according to surveys from the French Ministry of Housing.
Rural communities are also losing their local businesses and amenities, which makes them less appealing to live in. The French Chamber of Commerce and Industry found that 25% of small businesses in these areas shut down between 2015 and 2020. This closure of businesses further reduces the attractiveness of rural living, leading to a lower demand for rental properties.
As these areas become less populated, the demand for rental properties naturally decreases. Fewer people mean fewer tenants, which directly impacts rental yields. This trend is particularly noticeable in regions where local amenities are disappearing, making it harder to attract new residents.
For potential property buyers, this means that investing in rural areas might not yield the returns one would hope for. The combination of population decline and business closures creates a challenging environment for maintaining rental income.
Understanding these dynamics is crucial for anyone considering buying property in rural France. The ongoing migration to urban centers and the decline in local businesses are key factors to keep in mind.
Sources: INSEE, INSEE, Ministère du Logement, Chambre de Commerce et d'Industrie de France
4) More foreign buyers will seek properties in Provence for its cultural charm and pleasant climate
Foreign buyers are increasingly eyeing properties in Provence, drawn by its cultural charm and delightful climate.
In the Provence-Alpes-Côte d'Azur region, the share of non-resident foreign buyers has been climbing, hitting around 4% by early 2023. This uptick shows a growing interest from international investors who are captivated by what Provence has to offer.
Provence's cultural allure is undeniable, with tourism booming and a 31.9% jump in Revenue Per Available Room in 2023, even surpassing pre-pandemic levels. This surge highlights the region's rich history, stunning landscapes, and lively cultural events, making it a magnet for those looking to invest in a piece of its charm.
The region's mild Mediterranean climate is another big draw. Known for its pleasant weather year-round, Provence offers a comfortable lifestyle that many foreign buyers find irresistible. It's no wonder the media often spotlights Provence as a top choice for expatriates, praising its quality of life and cultural richness.
Provence is not just about the weather and culture; it's a lifestyle. The region's picturesque villages, local markets, and vineyards create a unique living experience that foreign buyers are eager to be part of. This lifestyle, combined with the region's increasing popularity among tourists, makes it a prime spot for property investment.
With its blend of natural beauty and cultural vibrancy, Provence is set to remain a top destination for foreign buyers. The growing interest from international investors is a testament to its enduring appeal.
Sources: Notaires.fr, Global Asset Solutions
5) New environmental rules will raise costs for developers, affecting housing affordability
New environmental regulations in France are making property development more expensive.
One big factor is the rising cost of sustainable building materials. For example, concrete prices jumped by 21% in 2023, pushing up the overall cost of new constructions by 10-20%. This is because developers now need to use energy-efficient materials and equipment, which are pricier.
These regulations, like RE2020, are also hiking up compliance costs. In 2023, building permits dropped by nearly 30% compared to the previous year. This shows a slowdown in demand as developers struggle with these higher expenses. The French construction industry is facing its toughest challenge in decades, as these rules demand significant cuts in carbon dioxide emissions, further inflating construction costs and property prices.
Adding to the burden is carbon pricing, which includes emissions trading system permit prices and carbon taxes. This has pushed the average effective carbon price to EUR 29.65 per tonne of CO2e. This makes it even more costly for developers to build new properties.
While we don't have specific examples from other regulated markets, it's common for these increased costs to be passed on to buyers. This is likely happening in France too, affecting housing affordability.
Sources: BCG, Connexion France, OECD
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6) Demand for homes in the French Riviera will rise as remote work lets people live farther from big cities
The demand for properties in the French Riviera is set to surge as remote work becomes more prevalent.
In recent years, especially around 2023 and 2024, nearly 30% of the French working population worked from home. This shift is largely due to the growing acceptance of telework among French managers, who are keen to continue this trend. The flexibility of remote work is allowing more people to consider living further from major cities, making the picturesque French Riviera an attractive option.
The real estate market in the French Riviera is already buzzing with activity. Luxury properties have seen a notable increase in inquiries and sales. Between 2018 and 2023, the cost of properties over €15 million along the southeastern coast of France jumped by 15% to 20%. This surge is driven by affluent individuals who can work from anywhere, and they are drawn to the region's unique charm and exclusivity.
One of the key factors fueling this demand is the limited availability of properties. The region's limited stock creates a continuous tension, keeping prices high as supply struggles to meet demand. The allure of the Mediterranean lifestyle, with its mild climate and stunning natural beauty, makes the French Riviera a perennial favorite for retirees and second-home buyers.
International buyers are also a significant part of the equation. The French government's favorable tax policies for foreign investors are attracting interest from non-EU countries. This influx of international buyers is further boosting demand, as they seek to invest in the region's luxury real estate market.
The French Riviera's status as a luxury destination continues to draw buyers from around the world. The region's appeal is not just limited to its natural beauty; it also offers a lifestyle that many find irresistible. With remote work becoming more common, the opportunity to live in such a desirable location is more attainable than ever.
Sources: Statista, Bloomberg, French Riviera Property
7) Bordeaux properties will become more appealing as the city gains a reputation as a tech hub
Bordeaux is quickly becoming a tech hotspot, attracting major companies and startups alike.
In recent years, big names like Back Market have moved their headquarters to Bordeaux, signaling a shift in the city's economic landscape. This trend is part of a larger movement, with the FrenchTech Label playing a key role in nurturing a vibrant digital ecosystem. As a result, companies such as Ubisoft, Deezer, and Lydia have established a presence in the city, further cementing Bordeaux's status as a tech hub.
The government has been instrumental in this transformation, backing the digital sector with a substantial €57 billion tech investment plan. This initiative targets cutting-edge fields like AI, cybersecurity, and quantum computing, which has spurred innovation in Bordeaux. The city has seen a 33% rise in digital economy jobs, particularly in IT consulting and computer programming, creating a strong demand for skilled tech professionals.
Bordeaux's universities have stepped up to meet this demand by expanding tech-related courses, drawing students from all over France. The city's appeal is enhanced by its beautiful UNESCO World Heritage architecture and more affordable living costs compared to Paris. This makes Bordeaux an attractive option for tech workers seeking a high quality of life.
Media coverage has also played a part in highlighting Bordeaux's dynamic student life and burgeoning tech scene. The city's reputation as a tech hub is growing, making it an increasingly appealing destination for those in the industry.
We believe this video highlights Bordeaux's transformation into a tech hub, showcasing industrial real estate developments that increase the city's property appeal.
8) Coastal property values will drop as rising sea levels and environmental issues draw more attention
Coastal properties in France are under increased scrutiny due to environmental concerns.
In the Mediterranean region, coastal erosion is a significant issue, worsened by human activities like dam construction and dredging. These activities have reduced sediment supply from river deltas since the 1950s, making the problem more severe.
Looking ahead, coastal flooding events are expected to rise dramatically. By 2050, France might see a tenfold increase in flooding compared to the past decade, potentially facing over 100 days of flooding annually by the century's end. This highlights the vulnerability of coastal properties to climate change.
The Conservatoire du Littoral warns that around 50,000 residences may need relocation due to rising sea levels. Insurance companies are reacting by raising premiums for coastal properties, especially in high-risk areas like the Côte d'Azur, reflecting the growing risks.
Scientific studies predict ongoing sea level rise, threatening the entire French coastline, particularly sandy areas. Between 2016 and 2021, about 15,000 real estate transactions involved properties expected to flood before 2050. Local governments are tightening building regulations to mitigate these risks, as seen in the Basque shoreline management strategy.
Media coverage shows declining property values in vulnerable coastal areas, with surveys indicating that environmental concerns are causing buyer hesitancy. Real estate market reports confirm this trend, with climate risks adding to challenges like increased interest rates and stringent credit criteria.
Case studies of communities already affected by rising sea levels, such as those in the mouth of the Seine and the Atlantic coast, illustrate the real-world impacts. Cities like Le Havre, Bordeaux, Deauville, and Caen are particularly vulnerable, with at-risk property values by 2050 estimated to exceed €1 billion. Policy changes aim to reduce development in high-risk areas, providing buyers and tenants with climate-related information.
Sources: Coastal Erosion Statistics, Future Projections of Coastal Flooding, Insurance Premiums and Natural Disaster Coverage, Government Reports, Scientific Predictions, Local Initiatives, Media Coverage, Real Estate Market Reports, Case Studies, Policy Changes, and International Agreements, Local Coastal Risk Management Strategy
Our team found this video where French coastal communities' preparations for rising sea levels are highlighted, emphasizing the risks to property values in these areas.
9) Demand for rentals in university towns will grow as more international students arrive
The number of international students in France is on the rise, with 430,466 enrolled in the 2023/24 academic year.
Every year, nearly 1.6 million students hunt for accommodation, and a significant 60% of them need rentals. Cities like Paris, Lyon, and Bordeaux are hotspots, attracting a large number of students and creating a high demand for housing.
However, the supply isn't keeping pace. In some areas, there are only five available spots per 100 students, pushing many to seek housing in the private rental market. This shortage fuels fierce competition, making rentals even more sought after.
International students typically prefer renting due to their temporary stay. This trend boosts the demand for rentals, as these students often look for short-term housing solutions. The economic impact is notable, with more private rental options like student residences and studios emerging.
In university towns, the influx of international students is a key driver of rental demand. Their presence not only increases the need for housing but also influences the types of accommodations available, with a growing market for short-term and flexible rental options.
As more students arrive, the rental market in these cities becomes increasingly competitive, with landlords and property managers adapting to meet the needs of this dynamic group. The demand for rentals is not just about numbers; it's about the changing landscape of student housing in France.
Sources: The PIE News, Studapart, ICEF Monitor
10) Virtual reality will transform property viewings, simplifying investment in French real estate for international buyers
Virtual reality is changing how we view properties, especially for those eyeing French real estate.
Imagine exploring a charming Parisian apartment or a rustic countryside villa without leaving your couch. Over 50% of adults have already taken a virtual tour, and it's becoming the go-to method for many. 67% of home buyers prefer virtual tours when checking out properties, and listings with these tours get 87% more views. It's like having an open house 24/7.
For international buyers, VR is a game-changer. No more hopping on planes for every potential buy. VR slashes travel costs and time, letting you explore properties from your living room. This is a huge plus for those looking to invest in French real estate without the hassle of constant travel.
VR tech is not just a fancy gadget anymore; it's becoming more affordable and accessible. French real estate agencies are catching on, teaming up with VR providers to offer these immersive experiences. This trend is not just about convenience; it aligns with government initiatives supporting digital transformation in the property sector.
As VR becomes more mainstream, it's not just about seeing a property; it's about experiencing it. You can walk through rooms, check out the view, and even get a feel for the neighborhood vibe. This level of detail is invaluable, especially when making such a significant investment from afar.
Sources: PhotoUp, Bilan Invest 2023, Proprli, EZ Real Estate Tools
Our team found this video showcasing how virtual reality enables remote buyers to explore properties through immersive 360-degree tours, making international investments easier and more informed.
11) Lyon’s property market will boom as it becomes a hub for green tech and innovation
Lyon is quickly becoming a hotspot for green technology and innovation.
Thanks to increased funding, like the €5 million raised by Vizcab in 2023, Lyon is attracting significant investment and talent in the green tech sector. This influx of resources is making the city a magnet for businesses and professionals eager to dive into sustainable projects.
The local government is backing this movement with a hefty €54 million budget dedicated to environmental technologies. This financial support creates a nurturing environment for green tech entrepreneurs, solidifying Lyon's status as a hub for innovation.
Job opportunities in the cleantech sector are booming, with thousands of new positions in industries like land transportation and energy. This surge in employment is not only boosting the local economy but also driving up demand for housing near green tech hubs, pushing property prices higher.
Research centers like the LyonTech-la Doua Campus and partnerships between universities and green tech companies are fostering a culture of sustainability. These collaborations are making Lyon even more appealing to those interested in eco-friendly living and innovation.
International events like Pollutec and Solutrans are putting Lyon on the global map for green technology. These gatherings highlight the city's capabilities and open doors for business growth and transformation projects.
With evolving regulations and a growing interest in sustainable living, there's a rising demand for eco-friendly housing and office spaces. Urban projects like Lyon Confluence, which integrate energy, transport, and information technologies, are further fueling this demand.
Sources: ONLYLYON Business, Eu-Startups, ONLYLYON Business
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12) Blockchain will make property deals cheaper and clearer in France
Blockchain is transforming the French real estate market by streamlining property transactions.
In recent years, blockchain has become a game-changer in real estate, cutting down costs and boosting transparency. A notable example is the $78.5 million real estate tokenization deal in 2022, which aimed to acquire buildings in downtown Paris. This project offered a 6.5% yield on investment, making it more appealing to buyers by reducing the need for intermediaries and speeding up transactions.
Partnerships like the one between Wiztrust and Icade are showing how blockchain can enhance transparency. Wiztrust, a leader in blockchain information certification, teamed up with Icade to verify the authenticity of financial information, reducing misinformation risks. This collaboration underscores blockchain's role in ensuring transparency and security in real estate.
The French government's PACTE Act, introduced in 2019, has been pivotal in fostering blockchain's growth in real estate. By providing a regulatory framework for digital assets, it has created a favorable environment for blockchain adoption in property transactions, encouraging innovation and trust in the market.
Blockchain's ability to simplify processes is particularly beneficial in a market like France, where property transactions can be complex and time-consuming. By eliminating unnecessary steps, blockchain makes buying property more straightforward and less costly.
As blockchain continues to evolve, its impact on the French real estate market is expected to grow, offering buyers a more efficient and transparent way to invest in property. This trend is reshaping how transactions are conducted, making the market more accessible and secure.
Sources: Finzia Securities, EuropaWire, Global Legal Insights
Yes, blockchain technology is real and not just a trend. Don't believe us? This video shows how blockchain made selling the AnnA villa near Paris faster, cheaper, and more transparent by automating tasks, cutting paperwork, and securely tracking ownership.
13) Interest in homes with renewable energy and eco-friendly features will grow as sustainable living becomes more popular
In France, the shift towards sustainable living is reshaping the real estate market.
With new laws in place, energy efficiency is now a key factor in property value. This means that homes with renewable energy features are becoming more attractive to buyers. The French government has introduced a law that standardizes how energy efficiency is measured, which has a big impact on real estate and mortgages. This law encourages investment in renewable energy, making these properties more appealing.
To support this shift, the government offers tax incentives and subsidies for those investing in sustainable housing. The "MaPrimeRenov" scheme, for instance, helps with the cost of installing heat pumps and biomass boilers, making eco-friendly choices more financially viable. This proactive approach by the government is a significant push towards sustainable building practices.
Consumer preferences are also changing, with more people opting for eco-friendly homes. As awareness of environmental benefits grows, so does the market for sustainable real estate. Features like green roofs and solar power are becoming more popular, reflecting this trend. The media's focus on climate change has heightened public awareness, further driving demand for these homes.
In certain areas, properties with renewable energy sources are particularly sought after. Buyers are increasingly interested in homes that offer not just comfort but also sustainability. This trend is evident in the growing interest in properties that incorporate eco-friendly features, aligning with the broader shift towards sustainable living.
Overall, the move towards sustainability is not just a trend but a significant factor influencing the real estate market in France. As more people prioritize eco-friendly living, the demand for properties with renewable energy sources and sustainable features is expected to continue rising.
Sources: Enness Global, Côte d'Azur Sotheby's Realty, Ember Energy
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.