The French and Real Estate: Outlook and Challenges for 2025

The study “The French and Real Estate,” conducted for Laforêt, aims to understand and analyze the French people’s relationship with real estate projects. In the second half of 2024, favorable outlooks point to a rebound in the real estate market for 2025.

The French real estate market is subject to complex dynamics, with favorable prospects at the European level and domestic uncertainties. Purchase intentions remain stable, but financial requirements and compromises on energy efficiency could play a crucial role in the decisions of future buyers.
 

A favorable economic environment

In mid-September, the European Central Bank announced a second cut to its key interest rates for 2024. As a result, mortgage rates are falling as September gets underway. These positive indicators have not gone unnoticed by the French: more than one in two people surveyed have heard about the recent drop in interest rates (59%). Furthermore, nearly one in four respondents is considering an investment or a real estate purchase by the end of the year because of this drop (23%).
 

An Uncertain National Context

While the situation is improving at the European level, the national picture is moving in the opposite direction, which is having an impact on the real estate market. 66% of French people acknowledge that the uncertainty of the current political situation is causing them to wait before moving forward with their real estate plans, and this figure rises to 69% among potential first-time homebuyers.
 

Stable Purchase Intentions

Amid these two opposing trends, purchase intentions remain stable at the start of the second half of 2024. 17% of French people have purchased real estate this year or intend to do so, compared with 18% last June. However, reported purchase intentions are on the rise among young French people: 23% of 18- to 24-year-olds plan to buy a property in 2024, up 7 percentage points from June 2024. 

On the other hand, these new potential buyers are still in the early stages, as the increase in respondents has not yet begun their search. Furthermore, respondents aged 25 to 34 remain the leading potential buyers: 35% have purchased a property (2%) or intend to do so (33%) this year.
 

Factors That Influence Purchasing Decisions

While rising interest rates had eventually given way to a sense of resignation among the French—who were moving forward with their real estate plans despite the unfavorable economic climate—financial concerns appear to be resurfacing as the market enters a downturn. Attention to mortgage rates is growing, particularly among those who intend to purchase a property this year. 55% would take mortgage rates into account when seriously considering a purchase (unchanged from June, up 5 percentage points from March 2024). This figure rises to 87% among potential future buyers, which is 7 percentage points higher than in June and 8 percentage points higher than in March. 

Furthermore, the threshold that might encourage the French to consider a purchase remains very far off today: 28% cite a rate below 2%, even though current rates are still close to 4%. Mortgage rates are becoming an increasingly important factor for the main potential homebuyers. 73% of French people aged 25 to 34 would take mortgage rates into account, up 4 percentage points since last June.
 

Concessions on energy performance

Furthermore, the French might turn to less expensive investments by compromising on certain requirements. In particular, some might overlook the issue of energy performance assessments, even though this is very important to them. In March 2023, 83% of those surveyed said they looked at the energy performance certificate when viewing real estate listings. 

Nevertheless, today, nearly one in three French people could consider investing in a home with an energy performance rating of F or G in order to benefit from a more affordable purchase price (35%). French homeowners are more likely to compromise on energy efficiency for a future purchase. 43% would consider buying a home with an EPC rating of F or G. In contrast, respondents who have not yet purchased a property are slightly more selective (31%).
 

Student Housing: A Financial Headache

The housing crisis in France is hitting students particularly hard, as they are a particularly vulnerable group. When asked about their financial situation, seven out of ten students admit that they need to rely on financial assistance (from family, loans, student grants, etc.) to make ends meet (71%).