France's Residential Property Market Analysis 2025

After several years of sharp declines in activity, the French housing market is showing tentative signs of recovery and price stabilization as the headwinds previously constraining new development ease, and improved lending conditions support buyer demand.

This extended overview from Global Property Guide covers key aspects of the French housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

The French housing market is showing cautious signs of recovery and price stabilization after several years of sharp declines in activity. In the first quarter of 2025, the price index for second-hand dwellings in Metropolitan France rose marginally by 0.39% year-on-year (-0.67% inflation-adjusted), marking the first annual price increase since Q2 2023, according to preliminary data from the National Institute for Statistical and Economic Studies (INSEE). On a quarterly basis, prices increased by 1.03% (0.71% inflation-adjusted).

France's house price annual change:

Data Source: Institut National de la Statistique et des Études Économiques.

In line with national trends, Île-de-France, the country's most populous and economically significant region, saw further easing in downward price pressures, supported by stabilizing sales volumes. Prices in the region were largely stable year-on-year in Q1 2025, while Paris recorded a slight annual increase of 0.4%, with the average price of second-hand apartments reaching EUR 9,530 (USD 10,028).

According to the latest report from the Chamber of Notaries of Paris, annual price growth of between 1% and 5% is expected from July across all markets in Île-de-France. "Market participants are cautiously optimistic that the market has entered a new phase after two particularly challenging years. However, uncertainties remain high, as the current economic, geopolitical, and financial environment could still undermine these early positive signals," the report noted.

Price dynamics of second-hand apartments sold in the Île-de-France region:

Data Source: Chamber of Notaries of Paris.

The National Real Estate Federation of France (FNAIM) reported that as of June 1, 2025, the average residential property price nationwide stood at EUR 2,953 (USD 3,400) per square meter, down 0.6% from a year earlier. Looking ahead, FNAIM expects a modest recovery, projecting a 1% year-on-year price increase in the second half of 2025. "The French real estate market has gone through an unprecedented period of turbulence. We are now seeing a moderate rebound, but this will only be sustainable if financing conditions remain favorable and household confidence is restored," said Loïc Cantin, President of FNAIM.

Historic Perspective:

Market Cycles Responsive to Global Economic Conditions and Government Measures

After a seven-year bust period of low prices and declining supply in the early and mid-1990s, France experienced almost a decade of dynamic expansion of the housing market, when prices surged by 150% (113% inflation-adjusted) between 1997 and 2007, in part due to several consecutive legislative schemes that incentivized investment with attractive property amortization system and eventually encouraged new development. During the construction peak of 2005-2007, the average annual volume exceeded 576,000 authorized and 481,000 started residential units.

Reacting to the global financial crisis, the market started to weaken towards the end of 2008, reaching its lowest point in Q2 2009 when the prices decreased by 9.1% (8.9% inflation-adjusted) year-on-year. Construction activity slowed down, and in 2009, the total number of permits issued dropped to just over 380,000 units, with only about 343,000 dwellings started. A subsequent recovery followed, lasting until the end of 2011.

From 2012 to 2015, the housing market experienced a downturn, fueled by increases in interest rates, tighter credit conditions, and a reduction in tax advantages. House prices declined by an annual average of 1.7% before rebounding in 2016. This upward dynamic persisted even throughout the COVID-19 pandemic, when the house price growth strengthened to 6.4% (6.3% inflation-adjusted) in 2020 and to 6.9% (4.1% inflation-adjusted) in 2021, marking the highest year-on-year increase since 2010.

In 2022, the market slowed, with nominal prices rising by 4.69% year-on-year; however, high inflation resulted in a real-term decline of 1.3%. The deceleration persisted through 2023, reaching a trough in Q1 2024, when house prices for second-hand dwellings in Metropolitan France fell by 5.16% year-on-year (7.74% decline in inflation-adjusted terms). By the end of 2024, the market began to show early signs of stabilization, although construction activity remained well below average, with permits issued and new projects falling to 329,866 and 278,707 units, respectively.

20-year annual house price change (based on end-of-year price index of second-hand dwellings), Metropolitan France:

20-year construction activity dynamic (authorized and started housing units), France:

Data Source: INSEE.

Demand Highlights:

Growth in Existing Home Sales Points to Emerging Market Stabilization

Housing demand in France has shown a modest but steady recovery since autumn 2024. According to data from the General Council for the Environment and Sustainable Development (IGEDD), the total number of existing home sales over the 12 months to May 2025 reached 893,000, representing a 4.32% year-on-year increase and marking the third consecutive month of growth since March.

"After two years of marked decline, the real estate market has entered a transition phase, supported by monetary adjustments but still weakened by an uncertain economic and geopolitical context," the Superior Council of Notaries (CSN) noted in its latest report. The rebound is being driven by renewed household interest, supported by price stabilization and, in some areas, slight price increases. Easing monetary policy is beginning to improve credit accessibility, although bank lending remains cautious, particularly for more vulnerable borrowers. At the same time, persistent economic and geopolitical uncertainties continue to limit the pace of recovery despite the current consolidation phase.

In June 2025, FNAIM revised its bi-annual projections upwards, anticipating transaction volumes to increase by 11% over the year to around 940,000 units.

Data Source: CGEDD.

By contrast, new home sales have yet to stabilize on a positive trajectory. According to the Ministry of Ecological Transition and Territory Cohesion, the number of new homes reserved by individual buyers in the first quarter of 2025 totaled 15,865 units (adjusted for seasonal variation and working days), reflecting a 2.97% year-on-year decline. Experts attribute this drop to the end of the Pinel scheme, which significantly reduced sales to private investors, compounded by sluggish supply in the new housing market over recent years.

Data Source: Ministry of Housing and Urban Renewal.

Nonetheless, several regions reported growth in reservations by individual buyers. Increases were recorded in 5 out of 13 regions, with the strongest gains in Corsica (+32.48%), Grand Est (+10.53%), and Bourgogne-Franche-Comté (+10.00%). Île-de-France accounted for nearly 5,000 reservations, 32% of the national total, registering an 8.56% year-on-year rise.

New homes reserved by individuals by region, Metropolitan France:

Supply Highlights:

Gradual Recovery Underway as Policy and Financing Conditions Improve

Residential construction in France is showing early signs of stabilization after a prolonged downturn. The sector had been weighed down by surging construction costs, tighter environmental regulations, higher borrowing rates, and reduced government support. These headwinds are now easing, supported by falling interest rates and renewed policy incentives.

According to the Ministry of Housing and Urban Renewal, 186,748 dwellings were authorized for construction in France in the first half of 2025, marking a 12.83% increase year-on-year. Housing starts also improved, though at a slower pace, rising 4.53% year-on-year to 142,150 dwellings.

Data Sources: Ministry of Housing and Urban Renewal.

The Île-de-France region continued to account for the largest share of residential permits (16%) and housing starts (14%). Within the region, authorizations rose 11.90% year-on-year, while new starts remained in negative territory, declining 1.78%. Regions of Metropolitan France recording growth in both indicators included Pays de la Loire, Occitanie, and Nouvelle-Aquitaine.

Residential construction activity by region, Metropolitan France:

Looking ahead, the Bank of France projects a gradual recovery in the residential construction sector from mid-2025, as policy and financing conditions improve and the number of building permits stabilizes after a prolonged decline. The French Building Federation (FFB) anticipates a more pronounced rebound from 2026. In March 2025, the FFB revised its forecast for the year, projecting housing starts to increase to around 303,000 units, supported by improved credit conditions, lower mortgage rates, and policy measures such as the nationwide reintroduction of the zero-interest PTZ loan until the end of 2027. "We are beginning to see the first effects of a rebound in sales since Q4 2024, but the full impact will only materialize in 2026," the Federation noted.

Rental Market:

Rental Growth Stabilizes, Market Continues to Tighten

As of 2024, based on preliminary figures from the INSEE, 40.3% of primary residences in Metropolitan France were occupied by tenants, of which 22.8% in the private rental sector and 17.4% in the public rental sector.

France's rent price index:

Data Source: OECD.

Following a period of rapid acceleration in 2022-2023, rental inflation, measured by the INSEE rent index, has stabilized throughout 2024 and early 2025 in both segments of the market. The overall rent index for Metropolitan France showed a 2.3% year-on-year increase in Q1 2025, only a marginal fluctuation from the 2.4% annual increases previously recorded in Q4 2024 and Q1 2024. The social sector continued to demonstrate a more pronounced growth (3.4% year-on-year) compared to the private sector (1.7% year-on-year).

In the Paris conurbation, rental growth outpaced nationwide rental inflation, the index recording a 2.6% year-on-year increase for both sectors combined, 1.8% for the private sector, and 3.9% for the social sector.

In parallel, the INSEE rent reference index (a forward-looking indicator based on the overall consumer price inflation trend in the country and used to determine the allowed rent increases under existing contracts in the private sector) had been released from the 3.5% annual growth cap previously established by the government for Q3 2022 - Q1 2024 and continued to decelerate, dropping from the year-on-year growth rate of 3.26% in Q2 2024 to most recently reported 1.04% in Q2 2025.

Over the last decade, the growth in apartment prices in France has significantly outpaced the growth in rents, both nationwide and in the capital region. The slower increase in rents can be in part attributed to a large public housing sector and the heavily regulated nature of the rental market in France, where, during certain periods, allowable rent increases were set below the inflation rate. Aiming to improve housing accessibility, rental regulation in France is complex, widely debated, and subject to change with each new political majority. A summary of the current regulatory framework is available from the Legal and Administrative Information Department of the French government.

Data Source: INSEE.

In nominal terms, according to the real estate investment firm Catella, in Q1 2025, the average asking rents per square meter of apartment on offer reached EUR 31.10 (USD 32.73) in Paris, EUR 19.60 (USD 20.63) in Nice, and EUR 18.30 (USD 19.26) in Toulouse, while other major French cities such as Marseille, Lyon, Bordeaux, Montpellier, and Nantes remained more affordable with average apartment rents about EUR 14-16 per square meter. Prime yields in key French submarkets are estimated by Catella within the range from 3.80% in Paris to 5.00% in Lyon.

The research conducted by Global Property Guide in June 2025 showed gross rental yields for residential units in France at the average level of 4.63%, slightly down from 4.70% previously reported in December 2024. The highest potential performance among the surveyed submarkets was estimated for rental properties in Marseille (5.26%), Nantes (4.77%), and Paris (4.76%), while the lowest yields were recorded in Bordeaux (4.33%).

Average asking rents in selected submarkets:

Overall, the French rental market has been tightening, with new supply not catching up to falling homeownership rate and consistently growing pool of renter households (240,000 additional tenants in 10 years, according to FNAIM). "Rental supply is falling, particularly in major cities, with a rise in long-term furnished accommodation at the expense of unfurnished rentals. Rentals are finding takers faster (15 days on average in 2023, compared to 21 in 2019), while tenants are staying longer, reducing market fluidity," FNAIM summarized at their most recent biannual press conference.

Among the recent challenges, the earlier analysis from FNAIM pointed out the issue of energy standards compliance: starting from January 2025, homes rated G in the Energy Performance Diagnostic (DPE) can no longer be rented, directly affecting 567,000 properties. With landlords now withdrawing G-rated properties from the market due to high renovation costs, rental supply, especially in larger cities, continues to shrink.

The end of the tax reduction scheme for rental property investments under the Pinel law (which is no longer available since January 2025) and the growing number of short-term rental properties across France (now under stricter regulation under the so-called Le Meur law) are also likely to impact the development of the market in the upcoming periods.

Mortgage Market:

Interest Rates Show Signs of Stabilization, Loan Production in Recovery

Interest rates on housing loans in France are now stabilizing as the European Central Bank (ECB) is believed to be approaching the end of its monetary policy easing cycle. In June 2025, the ECB announced another 25 b.p. cut to its benchmark rates, bringing the deposit facility rate to 2.00%, the main refinancing operations rate to 2.15%, and the marginal lending facility rate to 2.40%. At the most recent policy meeting at the end of July, however, the regulator's governing council voted to maintain the rates at current levels, noting that inflation is at its medium-term target and domestic price pressures continue to ease, although the global environment remains "exceptionally uncertain, especially because of trade disputes".

France's mortgage loan interest rates:

Data Source: ECB.

The June cut being the eighth since the easing cycle began a year earlier, monetary policy observers now generally agree that the ECB is nearing the end of its rate-cutting cycle, expecting the rates to be cut just one or two more times by the end of the year, with the deposit rate reaching 1.5%.

Data Source: ECB.

In line with policy developments, the average interest rates to households for house purchase in France show signs of stabilization for both new and existing credit categories. In June 2025, the interest rate on new loans reached 3.00%, only marginally down from 3.05% in March. According to the Bank of France, the rate for all new housing loans (including renegotiations) is now about 40 b.p. below the average level observed between the end of 1998 and mid-2022. "Mortgage loans are now cheaper in France than the eurozone average," stated the central bank.

As for the outstanding housing loans, the average interest rate continues to demonstrate an upward dynamic year-on-year, still reflecting the lasting impact of sharp increases in recent years, although the pace of growth has notably slowed. In June 2025, the indicator was reported at 1.89%, unchanged from March and only 0.14 p.p. above the June 2024 level.

Based on the Bank of France reporting, most new housing loans in France are granted at fixed interest rates, and the share of variable-rate loans remains significantly lower than the eurozone average.

Average interest rates on loans to households for house purchase:

Lower interest rates gradually revived pure new lending and the overall new loan production in France. In the first six months of 2025, the total value of new loans to households for house purchase in the country reached EUR 88.03 billion (USD 101.4 billion), which was 40.2% above the comparable period in 2024, although still substantially below the previous peak of 2021.

"This rebound reflects a much more favorable context for borrowers, with the cost of real estate loans falling by one percentage point since the peak reached in January 2024 <…> The survey of banks on the distribution of credit confirms an increase in demand for housing loans from households alongside a relaxation by credit institutions of the criteria for granting real estate loans," the Bank of France commented in its latest overview of household housing loans.

Data Source: ECB.

As a consequence of this recovery in production, the annual growth rate of outstanding housing loans is gradually recovering, according to the Bank of France's preliminary assessment. While in 2024, the annual variation in outstanding housing loans remained negative for the second year in a row, with repayments of past loans still exceeding the amounts of new lending, by June 2025, the stock exceeded EUR 1.29 trillion (USD 1.49 trillion), demonstrating a 0.22% increase since the end of the previous year.

At the same time, the relative size of the French housing loan market, measured by the credit stock to GDP ratio, continued to fall from the peak of an estimated 51.4% of GDP at current prices in 2020 to an estimated 44.1% in 2024. "The ratio of outstanding household housing loans to GDP has been declining in France since mid-2022," noted the country's central bank. "While this decline is slightly more pronounced in France than in the eurozone average <…>, the ratio remains significantly higher than that of our main European neighbors."

According to the latest figures from Eurostat, 31.2% of French households are homeowners with an outstanding mortgage or housing loan.

Data Source: ECB.

Socio-Economic Context:

Slow-Paced Growth, Expansion of Government Debt to Continue

Despite high uncertainty, the French economy demonstrated resilience in 2024, with real GDP growth reaching 1.1%, supported by the impact of the Paris Olympics (which temporarily boosted services and consumption), while household savings rates continued to rise and tight financial conditions weighed on private investment. At the same time, held back by fiscal adjustment and trade-related uncertainty, economic activity in France is expected to decelerate strongly in 2025, with growth now projected by the European Commission to slow to 0.6% this year before picking up to 1.3% in 2026 as investment recovers and higher real wages support a further expansion in private consumption.

Consumer Price Index (CPI) inflation in the country eased significantly from 5.7% in 2023 to 2.3% in 2024 and was most recently reported by the INSEE at 1.0% in July 2025. The European Commission projects the indicator to decrease further, falling to 0.9% in 2025 on the back of falling energy prices, before picking up slightly to 1.2% in 2026. 

Data Source: IMF.

Despite some signs of softening, the French labor market has shown resilience amid successive shocks in recent years and remains relatively stable, with the seasonally adjusted ILO unemployment rate in Metropolitan France fluctuating close to its lowest level since 2008 and most recently recorded by the INSEE at 7.3% in Q2 2025 - unchanged from the previous quarter only marginally up from 7.1% reported during the same period in 2024. The European Commission, however, expects the unemployment rate to increase to 7.9% in 2025 and to decline only marginally in 2026. 

The ongoing pension system overhaul continues to be among the most heated topics of debate following the controversial reform in 2023, which raised the retirement age to 64. Labor unions across the country maintain a strong opposition, questioning the long-term sustainability of the system and organizing protests and strikes that sometimes led to paralyzed transportation and public services.

Data Source: INSEE.

In public finances, despite the French government's efforts to control spending, the fiscal stance was again expansionary last year, with the general government deficit increasing to 5.8% of GDP in 2024, from 5.4% in 2023. The European Commission attributes this increase in the deficit to tax revenues rising well below economic activity, the indexation of social benefits (pensions) to high inflation in 2023, and high public consumption and investment growth by local governments. In parallel, the debt-to-GDP ratio increased to 113% of GDP in 2024 and is expected to keep growing further.

"High and rising public debt, combined with significant domestic and external headwinds to the recovery, highlights the urgent need to strengthen public finances and pursue structural reforms to foster sustainable growth," pointed out the 2025 Article IV staff report from the International Monetary Fund (IMF).

Overall, while the French economy continues growing, deepening geoeconomic fragmentation and domestic policy uncertainty pose significant downside risks to the outlook, according to the IMF assessment. The most recent macroeconomic projections from the Bank of France also note that tariff-related trade risks are compounded by geopolitical risks and risks related to French economic policy. "The war in Ukraine and the situation in the Middle East remain sources of instability, which could put upward pressure on oil and gas prices, as well as shipping costs, resulting in upside risks to inflation and downside risks to economic activity. In addition, there remains considerable uncertainty surrounding the future 2026 Budget Act," said the central bank.

In March 2025, Fitch Ratings affirmed France's 'AA-' standing with a negative outlook, which reflects "significant risks due to substantial fiscal deficits and rising government debt levels". At the same time, domestic political fragmentation continues to complicate the country's ability to implement sustainable fiscal consolidation.

Sources:

1. National Institute of Statistics and Economic Studies (INSEE)
   1. In Q1 2025, Prices Of Second-Hand Dwellings Went Up: https://www.insee.fr/
   2. Annual Estimates of the Housing Stock: https://www.insee.fr/
   3. Between January and April 2025, Rents Increased by 0.3%: https://www.insee.fr/
   4. In Q2 2025, the Housing Rent Reference Index Increased by 1.04% Over a Year: https://www.insee.fr/
   5. In July 2025, Consumer Prices Increased by 1.0% Year on Year: https://www.insee.fr/
   6. In Q2 2025, the unemployment rate was stable at 7.5%: https://www.insee.fr/
2. European Central Bank (ECB)
   1. ECB Data Portal: https://data.ecb.europa.eu/
   2. Key ECB Interest Rates: https://www.ecb.europa.eu/
   3. Monetary Policy Decisions, 24 July 2025: https://www.ecb.europa.eu/
3. Bank of France
   1. Bank of France Data Portal: https://webstat.banque-france.fr/
   2. Loans to Individuals, France 2025-06: https://www.banque-france.fr/
   3. Overview of Household Housing Loans - July 2025: https://www.banque-france.fr/
   4. Macroeconomic Projections - June 2025: https://www.banque-france.fr/
4. Legal and Administrative Information Department
   1. Real Estate Rental (FR): https://www.service-public.fr/
   2. Rent Reference Index (IRL) (FR): https://www.service-public.fr/
   3. Rental Investment Schemes (FR): https://www.service-public.fr/
   4. Real Estate Diagnostics: Energy Performance Diagnostics (EPD) (FR): https://www.service-public.fr/
5. Legifrance
   1. Law no. 2024-1039 of November 19, 2024, Aimed at Strengthening the Regulatory Tools for Furnished Tourist Accommodation at the Local Level (FR): https://www.legifrance.gouv.fr/
6. General Council for the Environment and Sustainable Development (CGEDD)
   1. House Prices in France: Property Price Index, French Real Estate Market Trends in the Long Run: https://www.igedd.developpement-durable.gouv.fr/
7. Ministry of Ecological Transition and Territory Cohesion
   1. Housing Construction. Results at the end of June 2025: https://www.statistiques.developpement-durable.gouv.fr/
   2. Marketing Of New Housing - Sale To Individuals in the 1st Quarter of 2025 (FR): https://www.statistiques.developpement-durable.gouv.fr/
8. International Monetary Fund (IMF)
   1. Country Overview: France: https://www.imf.org/
   2. 2025 Article IV Staff Report: https://www.imf.org/
9. European Commission
   1. Economic Forecast for France: https://economy-finance.ec.europa.eu/
   2. Distribution of Population by Tenure Status, Type of Household and Income Group: https://ec.europa.eu/
10. Superior Council of Notaries (CSN)
    1. Real Estate Market Report - July 2025: https://www.notaires.fr/
11. Chamber of Notaries of Paris
    1. Real Estate Market in the Paris Region. First Quarter of 2025 and Outlook (FR): https://paris.notaires.fr/
12. French Building Federation French Building Federation (FFB)
    1. Finally a Clearing (FR): https://www.ffbatiment.fr/
13. National Real Estate Federation of France (FNAIM)
    1. Housing Market: Recovery Subject to Conditions (FR): https://www.fnaim.fr/
    2. Housing Market: Recovery Subject to Conditions. Press Conference Presentation. (FR): https://docs.fnaim.fr/
    3. Economic Situation and Housing Policy: From Crisis to Recovery (FR): https://www.fnaim.fr/
14. Fitch Ratings
    1. Fitch Affirms France at 'AA-'; Outlook Negative: https://www.fitchratings.com/
15. Morningstar
    1. Will the ECB Cut Interest Rates Again in 2025? https://global.morningstar.com/
16. Catella
    1. European Residential Market Overview Q1/2025: https://www.catella.com/
17. Le Monde
    1. French Parliament Passes Law to Tighten Airbnb Regulation: https://www.lemonde.fr/
18. Reuters
    1. 1. France's Latest Pensions Battle Could Ignite Fresh Political Crisis: https://www.reuters.com/
19. Batiweb
    1. New Housing: Reservations Fell by Nearly 8% in Q1 2025 (FR): https://www.batiweb.com/