Why Luxury Real Estate Prices Have Held Steady in a Bear Market

It’s a real paradox in the real estate market: the number of transactions is plummeting in France due to buyers’ difficulties in accessing credit, and yet luxury real estate prices have held steady and are even beginning to regain momentum on major listing sites, as evidenced by the Coldwell Banker study.

On the other hand, luxury real estate prices have bucked this downward trend and have even begun to show some upward momentum on major listing sites, as evidenced by a recent study by Coldwell Banker.

Despite high prices, luxury real estate is not deterring buyers. On the contrary, demand for this type of high-end property in France has been growing since the beginning of 2024, leading to a stabilization—or even a slight recovery—in prices.

This surprising situation can be partly explained by recent geopolitical and economic upheavals. The outbreak of wars in Ukraine and Gaza, along with sharp increases in interest rates, have caused some instability in the real estate market. As a result, many concerned buyers have stayed on the sidelines, leading to a decline in sales in 2023.

Faced with this decline in demand, many owners chose to take their luxury properties off the market. However, those who kept their properties on the market agreed to relatively reasonable price reductions in order to attract potential buyers.

With demand gradually recovering, experts expect luxury real estate prices in France to rebound and resume an upward trend as early as 2025. However, this upward trend could be limited by the supply of luxury real estate, which remains very limited. Indeed, the high-end construction sector has been particularly hard-hit by the economic crisis and is no longer able to expand the supply of luxury real estate, which is already structurally unbalanced.

In this context, what is the current state of the luxury real estate market in France in the first half of 2024? Coldwell Banker’s 4th market report provides some answers.

It is interesting to note that economic growth in the United States, which has led to soaring prices and wages, has widened the gap with Europeans’ standard of living to an unprecedented level. This situation is encouraging Americans to continue investing in real estate in Paris and on the French Riviera, two particularly sought-after luxury real estate markets.

In contrast, the second-home markets—which are sensitive to buyer confidence—are currently struggling. In Biarritz and La Baule, prices have fallen to reflect the decline in buyers’ budgets. However, this rapid adjustment should lead to a significant recovery as early as this summer.

The rebound in the high-end real estate market in major French cities since the beginning of the year is a positive indicator of the overall recovery of the real estate market. Buyers, encouraged by more stable conditions and not wanting to miss out on the market correction, are reaffirming their confidence in real estate as a safe haven. As the year progresses, Coldwell Banker expects this upward trend to continue and spread to other regions of France.

Among the most attractive French cities for luxury real estate, Annecy, Antibes, and Arcachon stand out with their triple-A ratings. Ideally located near major urban centers, yet serving as truly self-sufficient communities, these cities attract new urban residents seeking an exceptional quality of life.

Finally, it should be noted that many property owners have decided to take their luxury properties off the market in the hope of capitalizing on the windfall effect of the Olympic Games and offering them at exorbitant prices. However, disappointment is beginning to set in, as demand for this type of property has not materialized