Real estate prices are holding up, except in Ile de France.

Sales numbers are falling, but not the prices

The real estate market at the end of this year reflects a landscape of nuances where stability and long-term growth hide behind sometimes brutal adjustments.

Despite a common perception of a retreating market, the past year has revealed some resilience in real estate prices across the French territory (-0.3% between December 2022 and December 2023). Against expectations, the decrease in prices has not been as marked as anticipated, except in the Île-de-France region where the drop is significant over a year (-3.5%).

This decrease, however, is largely insufficient to offset the recent rise in rates and the dramatic increase in prices in past years. If we take a step back over five years, prices still show very significant growth (+22.3%).

The figures seem to suggest a strong watchfulness on the part of sellers as well as buyers. In a year, the number of sales has dropped by nearly 18% on average across the whole of France, and by almost 20% in Île de France! The market has stalled, between sellers not wishing to (yet) lower their prices and buyers struggling to find financing. If the phenomenon persists, the drop could accelerate in the coming months even if rates seem to have reached their high point.

Ile de France dives, Cote d'Azur soars

The most notable decreases in apartment prices can be found in Lyon (-6.8%), Paris (-5.3%, with an average price still above 10,000 euros per sq. m), but also in Limoges (-7.9%), Avignon (-7.3%), Bordeaux (-4.7%) and numerous suburbs of Paris: Colombes (-6.7%), Issy-les-Moulineaux (-7.2%), Saint-Maur-des-Fossés (-7.8%), Levallois-Perret (-5.4%), Neuilly-sur-Seine (-5.3%), Nogent-sur-Marne (-5.6%)...

Although these figures are significant over a year, they nonetheless fit into a broader context where the five-year progression remains impressive.

But what stands out the most in this context, without a doubt, is still the soaring growth of certain cities, particularly along the Mediterranean coast, each having registered a remarkable increase despite sometimes uncertain conditions: Antibes (+8.3%), Fréjus (+6.6%), Perpignan (+4.7%) and Nice (+4.2%) are almost exceptions in the market, along with Aix-les-Bains (+7.1%), Niort (+5.1%) and Reims (+4.5%).

Rents continue to rise, enhancing rental potential

For individuals who opt for real estate investment, price trends make little sense if they are not compared with rent trends. It is clear to see that rents are on the rise in most cities, which inherently enhances the potential rental yield.

Only a few municipalities like Bordeaux (-0.5%) and Reims (-0.3%) have seen a drop among the 70 cities studied, amongst which the suburbs of Paris are overrepresented: Montreuil (-6.9%), Versailles (-1.9%), Asnières-sur-Seine (-1.3%), Courbevoie (-0.6%), Rueil-Malmaison (-2.3%)...

The potential gross rental yields for apartments are generally around 4.8%. The « best » cities have theoretical potentials reaching up to 9.8% in Mulhouse, 8.3% in Saint-Etienne, 7.8% in Perpignan, and 6.7% in Cholet.

Some municipalities stand out as sound choices, reflecting the market's ability to offer profitability opportunities, particularly for those who know where to look. Caution, however, must be exercised due to the chasm that can exist between theory and practice: the property bought must obviously suit potential renters in both location and layout. Therefore, due diligence and a local study is necessary to avoid disappointments.