Property market forecasts for 2025: Recovery in prices and transactions
As we approach 2025, the French property market finally seems to be turning the corner after several difficult years of falling transactions and prices. While 2024 was a complex year, there are signs of an upturn in the year ahead, with prices set to rise again and more favourable economic conditions.
1. A turning point for the property market in 2025
The last three years have been particularly challenging for the property market, with rising interest rates, inflation and a crisis in the construction sector. In 2023, the number of transactions has fallen by more than 20% compared with 2022, reaching an all-time low of under 900,000 sales. This drop in activity has also been accompanied by a fall in prices, mainly due to weaker demand and reduced access to credit as a result of the sharp rise in interest rates.
Mortgage rates, which reached almost 4% in 2024, have severely restricted access to home ownership for many households. Inflation and the rising cost of living have also weighed on purchasing power, putting the brakes on property purchases. In addition, the construction sector has suffered a 23% fall in new builds, exacerbating the shortage of available supply.
2. Favourable economic conditions for 2025
However, 2025 should mark a turning point for the property market. Economic conditions appear to be stabilising, with interest rates set to start falling, supported by the decisions of the European Central Bank (ECB). In December 2024, average mortgage rates fell to 3.3%, a more favourable level for borrowers. Projections suggest that this downward trend could continue in 2025, with rates falling below 3% for certain loan terms, giving renewed hope to first-time buyers and investors.
Buyer confidence should also gradually return thanks to the stabilisation of inflation, lower key interest rates and improved management of supply chains. Together, these factors should encourage a recovery in property transactions and investment.
3. 2025: A year of recovery for property demand
The year 2025 should see a significant upturn in demand for property. A number of factors point to a revival in the market: lower borrowing rates, the renewed attractiveness of urban and suburban areas, and the government’s incentive policies.
- Lower borrowing rates: The easing of borrowing rates is giving first-time buyers and investors back their borrowing capacity.
- Attractiveness of urban and suburban areas: After a period of relocation to rural areas, major cities and their suburbs are regaining their dynamism. Cities such as Paris, Marseille and Bordeaux are beginning to see price rises due to increased demand.
- Incentive policies: The government is supporting market recovery by extending the Pinel scheme and tax breaks for rental investment, thereby encouraging investor confidence.
4. The fast-growing rental market
In 2025, the rental market will continue to grow, underpinned by soaring demand. Faced with the difficulties of accessing property ownership, many households are turning to renting, leading to a rise in rents, particularly in large towns and cities and their suburbs. This situation is benefiting rental investors, who are seeing their profitability rise.
The Paris 2024 Olympic Games have also helped to stimulate short-term rental demand, with an influx of visitors and investors. Neighbourhoods close to the Olympic venues have benefited from property development, driven by urban regeneration projects and infrastructure improvements.
Despite the crisis, the French still see property as a safe and stable investment. After a period of reluctance, banks are expected to gradually ease their lending conditions, which will help to boost property transactions in 2025.
5. Conclusion: A Year of Recovery for Real Estate
The year 2025 should mark the start of a recovery in the property market, driven by demand for housing stimulated by more favourable economic conditions and falling interest rates. Prices should start to rise, particularly in the major cities, and the rental market should benefit from the attraction of investors. If banks show more flexibility, transactions will pick up again, and the property sector could enjoy a particularly dynamic year in 2025.
