France Housing Sales Almost Stop Growing

Realty+

Prices for existing homes in France fell by 1% in the second quarter of 2026 compared with January–March and by 0.8% year-on-year. At the same time, mortgage rates are rising and the recovery in demand is slowing, Realty+ reports, citing data from France’s National Institute of Statistics and Economic Studies (INSEE).

Home Prices in France Declined

After four consecutive quarters of growth, the French housing market returned to decline. In April–June 2026, existing-home prices fell by 1% compared with January–March and by 0.8% over 12 months. The indicator also declined in the first quarter, by 0.2%, meaning that the downward trend has continued for six months.

Apartment prices fell by just 0.1% year-on-year, while house prices declined by 1.3%. Prices in the provinces fell by 1%, while the decline in Île-de-France was 0.3%. Paris, however, continued to record growth: the average price of existing apartments reached €9,560 per sq. m, up 0.6% year-on-year.

Buyers in Greater Paris have become more demanding about property prices. Notaries note that overpriced homes may receive no offers. Owners who bought properties at lower prices and accumulated substantial capital gains are not always willing to lower their expectations. The gap between sellers’ asking prices and buyers’ purchasing capacity is making transactions more difficult to complete.

Housing Sales Trends in France

The peak of activity in France’s existing-home market came in the third quarter of 2021, when 1.248 million transactions were recorded over 12 months. Sales subsequently declined, reaching 952,000 transactions by the end of 2025, 24% below the peak level.

The recovery continued in 2026 but remained limited. By the end of March, the number of transactions over the previous 12 months had risen to 953,000, and by June to 958,000. This was 5.6% higher than in the corresponding period of 2025, but the latest figure was still 23% below the 2021 peak.

The French National Federation of Real Estate (FNAIM) revised its forecast for the full year 2026. The organization previously expected 960,000–980,000 transactions, but now forecasts 900,000–920,000. FNAIM attributes the deterioration in the outlook, among other factors, to the conflict in the Middle East, the resulting energy shock and renewed increases in mortgage rates.

New-Home Sales in France

Pressure from the demand side became apparent in the new-home market in April–June. Private buyers reserved 16,112 properties, down 4.8% from the previous quarter. At the same time, developers launched 17,499 properties, up 11.1% from January–March.

As a result, supply exceeded the volume of reservations by private buyers for the first time in the current cycle. The gap between the number of new properties offered by developers and buyer demand widened, creating additional challenges for the new-home market.

The situation is particularly significant against the backdrop of the broader slowdown in the housing market. The decline in reservations is occurring alongside an increase in supply, leaving developers to operate in an environment of more cautious buyer behavior and growing competition for demand.

Mortgage Rates in France Rise to 3.3%

The cost of housing finance has become one of the factors restraining demand. The European Central Bank raised its key rates in June for the first time in three years and made another increase in September. In France, this has already affected the cost of new mortgage loans, although the transmission of the changes has so far been incomplete.

The average interest rate on new housing loans, excluding renegotiations of existing loans, reached 3.30% in July, compared with 3.08% in December 2025. Higher borrowing costs primarily affect buyers who require new financing to purchase a property.

Most mortgages in France are issued at fixed rates, meaning existing borrowers are largely protected from ECB decisions. The main burden falls on new buyers: more expensive mortgages reduce their purchasing power and limit the potential for further growth in transaction volumes.

Rental Yields in France

Against the backdrop of slowing sales, France’s rental market is showing more stable dynamics. Changes in rents remain moderate, while the average gross residential rental yield has remained broadly unchanged since the end of 2025.

In the second quarter, the average gross residential rental yield reached 4.83%. Marseille had the highest yield among the cities considered, at 5.57%. Paris recorded a lower figure of 4.69%. Private-sector rents increased by 1% year-on-year. The official rent revision index rose by 1.15%, meaning actual rent growth was somewhat weaker than the regulatory benchmark.

In France’s so-called tight housing markets, restrictions on rent increases apply when certain rental agreements are signed or renewed. In July 2026, the rules were extended for another year. Paris and some other cities also have rent-control systems that set maximum base rents for certain categories of housing. Compliance with these requirements has deteriorated in the capital.

According to the sixth barometer by Fondation pour le Logement, the share of rental listings priced above the legal ceiling increased from 31% in 2025 to 46% in 2026. In Paris’s 16th arrondissement, the figure reached 62%, while in the 7th arrondissement it was 59%. The study covered more than 10,000 listings collected between August 2025 and August 2026.

France’s Economy Remains Weak

The overall economic situation in France remains a constraint on the housing market. In August 2026, inflation accelerated to 2.4% year-on-year, mainly due to higher energy prices. GDP was unchanged in the second quarter compared with January–March. INSEE lowered its forecast for economic growth in 2026 to 0.4%.

The labor market also remains weak, with unemployment at 8.3%. Consumer confidence remains below its long-term average. Household caution is also reflected in property-purchase decisions: with financing costs high and economic uncertainty persisting, buyers are less willing to take on large long-term financial commitments.

International Investment analysts note that expensive property and a weak economic backdrop are limiting the potential for further price increases. There has been no sharp collapse so far, but the conditions for a rapid return to the previous growth trajectory are insufficient. Given the existing relationship between property prices and rental rates, the potential for higher investment returns also remains limited.