France: Towards a (timid) recovery of the residential real estate market in 2025?

After two years of severe crisis, the French residential real estate market showed early signs of stabilization in 2024 : housing prices (Q/Q) were on average stable at the end of 2024 after six consecutive quarters of decline . T he decline in transaction volumes is slowing down, and new loans are rising again in a context of lower interest rates. Despite these first encouraging signals, the indicators remain very degraded in absolute terms : the transaction volumes observed remain well below previous years, around -35% compared to the peak at the end of 2021. The current situation is also characterized by a decrease in building permits (-12.7% Y/Y) and housing starts (-11.9% Y/Y), reaching their lowest level in over twenty years. Household investment, which accounts for nearly 5% of GDP, has had a negative contribution to growth every quarter since Q3 2021. We believe that it will become positive again only in the second half of 2025, supported by the continued easing of the ECB's monetary policy with a terminal rate expected at 2% by June, the increase in households' purchasing power in a context of low inflation, and future expectations of rising real estate prices. However, the deterioration of the labor market situation w ill dampen this recovery. Our outlook for the European real estate market (residential and professional) is available in our Real Estate Quarterly .