French Luxury Real Estate Could Drop by Up to 37% in 2025 – Analysts Warn

The French real estate market in 2025 is under serious pressure, with experts warning of a potential downturn not seen in decades. According to Iconic Riviera reporting, home prices on the Côte d’Azur had already dropped by over 20% in 2023. In some locations, declines of up to 30–37% are expected this year.

Until 2023, the market showed stable growth, but rising interest rates have since made mortgages harder to obtain—especially for budget-conscious buyers—causing transaction volumes to fall. Sellers, however, have been reluctant to adjust their pricing, resulting in stagnation.

High-End Properties Hit Hardest

Analysts say the luxury segment has been hit particularly hard. During the pandemic, buyers prioritized large, spacious homes in rural or coastal areas, but that trend has reversed. These properties are now seen as expensive to maintain and less desirable, making them the fastest to lose value.

Rising borrowing costs remain a key issue. Even high-income earners are holding back due to high mortgage rates and general market uncertainty. Banks have tightened their lending criteria, pushing many potential buyers out of the market altogether. As a result, the number of transactions has declined while inventory continues to rise.

Unrealistic pricing expectations by sellers are also delaying deals and adding to the uncertainty. Analysts forecast that prices could fall by up to 37% in regions that saw rapid growth in previous years. While this may present a buying opportunity for some, sellers should be mindful of further depreciation risks.

Urban Apartments and Green Homes Show Resilience

Apartments in urban areas and energy-efficient homes appear to be holding up better. Despite overall price drops in Paris, the premium segment remains relatively stable. According to the Chamber of Notaries, high-end districts have maintained demand, with only a modest 4.5% year-over-year decrease in average prices to €9,880 per sqm.

In Paris’s 7th arrondissement, prices still hover around €19,000 per sqm, with some properties exceeding €20,000. Demand from international buyers remains steady in the 6th and 8th arrondissements. Over the past decade, capital appreciation in the 6th and 7th reached around 35%, and 7.1% in the 8th over five years. According to Global Property Guide, rental yields stand at 4.83%—low but typical for developed markets.

Sellers also face rising compliance costs, particularly from France’s new ban on renting energy-inefficient properties. These environmental regulations further strain profitability and reduce investment appeal.

What’s Next for the French Real Estate Market?

Outlooks for 2025 vary. The Bank of France expects residential construction to recover in the second half of the year, potentially improving the broader market. The French Notaries Council (CSN) suggests that prices may have bottomed out and sees hope in falling interest rates and improved household purchasing power.

The National Federation of Real Estate (FNAIM) supports this optimism, forecasting a 6% increase in secondary market transactions to 825,000 this year.

Despite a few positive signs, a full recovery seems premature. The gap between buyer budgets and seller expectations continues to limit market activity. Analysts warn that earning returns from France’s luxury countryside homes in 2025 may prove increasingly difficult.