2024 looks to be an interesting year for the real estate market. Between new restrictions for energy-inefficient properties, challenges in new construction, and rising interest rates, the real estate market experienced a contraction in 2023. However, it is now showing more than encouraging signs of recovery, and according to the saying: “buy on the sound of the cannon, sell on the sound of the trumpet”. Turbulent times create opportunities that need to be uncovered.
In this context, preparing well for your real estate investment is even more important: how do you spot these opportunities? How do you approach a sale to get the best deal? PATRIMOLINK shares its insights with you.
How is the French real estate market shaping up in 2024?
Our article “Real Estate in France 2023: Review, Analysis, and 2024 Outlook” addresses the topic in more detail, but what’s crucial to note is that the French market has held up very well through the turmoils of 2023.
The French economy saw inflation rise and a notable overall slowdown in activity, impacting the real estate sector. However, it demonstrated resilience with a substantial sales volume, approaching levels seen in 2018 (965,000 sales), which were considered very positive by notaries at the time, before reaching peaks in the following three years.
Most of the factors that impacted the real estate market in 2023 were external. This dynamic can be interpreted as a return to a more “normal” and stable market situation.
Transactions volumes in France by end of August 2023
Why does the French real estate market remain dynamic?
It has held up thanks to solid foundations. Rental demand is sharply rising, driven by positive demographics, longer lifespans, and an increase in separations and the housing needs of single-parent families. The overall population continues to grow, as does the number of households (though household size is decreasing). This is a strong and enduring trend, as projected by INSEE (see graph).
Faced with this growing demand, supply is stagnant. The new construction sector struggles to provide enough new projects due to restricted available land (anti-urban sprawl policies, Net Zero Artificialization), rising material prices, and shortages (labor and materials). Additionally, difficulties in accessing mortgage loans for first-time buyers are lengthening rental periods and slowing down turnover in older homes.
Households figures in France (2008-2050), according to 3 different projection scenarios
Will property prices decrease in 2024?
The loss of purchasing power and difficulties in accessing mortgage credit have reduced the number of prospective buyers. With decreasing demand, a price inflection is expected by all sector players. It is still timid at the beginning of the year but could accelerate over the months. Sellers are still hesitant to revise their demands. Accustomed to continuous value increases, they hope for a market rebound with improved borrowing conditions.
The figures from Notaires de France are quite revealing. At the end of 2023, prices for existing homes in mainland France decreased by -1.8% year-on-year (1.6% for houses and 2% for apartments). For February 2024, they anticipate a 4.2% decrease in Île-de-France and 3% in the provinces.
These averages should be approached with caution as they include all types of properties. Depreciation rates vary across regions of France. At the beginning of 2024, prices are still rising in Le Havre and Nice but falling in Angers and Nantes, for example.
Property prices variation (Notary figures) for existing properties (houses and flats), In France, île de France (Paris region) and province over 3 months and 1 year (by 2023 3rd trimester).
How to identify investment opportunities in 2024?
Opportunities in 2024 are linked to the overall market slowdown. It primarily affects properties with deficiencies, especially those poorly rated in their Energy Performance Certificate (EPC), which affects their “green value” (see map below). The timeline for prohibitions on renting properties that are too energy-intensive is tightening around labels F and G. Owners who do not wish or cannot afford to make improvements are rushing to sell them and are sometimes inclined to negotiate.
French agency figures show that more than 74% of poorly rated properties are in Rennes, 72% in Paris, 70% in Nantes, 66% in Le Havre, 56% in Argenteuil, 43% in Toulouse and Lyon, and 41% in Lille. With such an influx, there is pressure on prices.
It should be noted that the value of “energy inefficient” properties is decreasing less in highly competitive areas, but their trend is also downward. These are often well-located properties with attractive features (outdoor space, remarkable architecture), making them viable investments.
Map of the “green value” of a property in 2021, showing the gain or the loss of value according to the energy efficiency – in comparison with an exiting house classified D
How to seize these opportunities?
It is important to remember that energy renovation work is often extensive and technical, especially when investing from abroad. Managing a construction site remotely can quickly become a headache and a financial burden (see estimates below).
It is better to be accompanied by professionals who can identify truly interesting properties and manage this type of project. Not all “energy inefficient” properties are equal in terms of overall condition, condominium conditions (also very important), and rental potential. A thorough understanding of construction trades and the local real estate market is essential.
Their services often involve renovating the entire building: insulation, ventilation, collective heating system. Apartment layouts are revised to adapt to current uses and optimize their rental potential. An all-in-one offer that simplifies investment in such properties and guarantees a smooth rental at the end of the project.
To negotiate your real estate investment well in 2024, understanding market dynamics is crucial. It clearly favors the buyer who faces new opportunities. Knowing how to spot them, anticipate work, is not an improvisation. Calling on sector professionals allows for a serene investment strategy.
Content compiled for informational purposes does not substitute current regulations. Without consulting our experts, PATIMOLINK cannot be held liable for potential consequences arising from implementing advice and information provided in this article.
