France experienced a significant decline in new home construction in 2024, with only 59,000 homes built—a 50% drop from two years prior. This ongoing real estate crisis is exacerbated by rising construction costs and interest rates, leading to a 5% decrease in reservations. While there was a slight increase in apartment sales, overall market challenges persist. Experts predict a slow recovery, with regions like Paris facing acute housing shortages. Proposed budget measures may help stimulate future purchases.
Decline in New Home Construction in France
In 2024, France witnessed the construction of only 59,000 new homes, representing a dramatic decrease of 50% compared to the figures from two years prior. This alarming trend highlights the ongoing crisis in the new real estate market. When excluding the pandemic-affected year, an average of 125,500 homes were constructed annually between 2017 and 2022. However, in 2024, this number plummeted to just 59,014, which is a staggering 29% decline from the previous year and nearly half of what was built in 2022, according to recent statistics released by the Ministry of Territorial Development.
Challenges Facing the Real Estate Market
Individuals secured reservations for 67,906 new homes last year, marking a 5% decrease from 2023, a year already deemed disastrous for new home production due to escalating construction costs and interest rates hindering many families’ purchasing endeavors. Pascal Boulanger, president of the Federation of Real Estate Developers, expressed his concerns, stating, “Everything is to be thrown away in 2024. It is the worst year in over 50 years and since the beginning of our statistics.” He elaborated that the ongoing crisis has perpetuated itself—due to poor sales, production has stalled, leading to fewer land purchases and a reduction in workforce.
While Boulanger remains hopeful for a rebound in 2025, he warns that revitalizing the industry could potentially lead to price hikes, as the need to attract the 5,000 workers who exited the sector may necessitate higher salaries, alongside potential bidding wars for land as developers compete to replenish their inventories.
In the last quarter, the average price per square meter for new apartments rose slightly to 4,756 euros, reflecting a minimal increase of 0.5% from the previous quarter. New home sales saw a modest recovery, increasing by 6.4% to 14,335 units sold between October and December, primarily driven by apartment sales. However, the sale of houses continued to decline, dropping by 15.5%.
The inventory of homes on the market, which peaked in mid-2023, is gradually decreasing. In the last quarter, 117,472 homes were available, a 3% decline from the previous quarter. Boulanger noted, “We have plenty of stock because we have no reservations at all, but if reservations pick up at a normal speed, we have half as many offers as in a normal year.”
Looking ahead, measures proposed in the 2025 State budget may stimulate home purchases among individuals, although significant peaks in activity are not anticipated for 2025. Boulanger cautions that it may take two to three years to fully reinvigorate the market.
Regions facing the most acute housing shortages, such as Paris, much of Île-de-France, the Côte d’Azur, and the border regions with Switzerland, accounted for over 50% of reservations and nearly 47% of sales recorded in the last quarter. Additionally, major urban centers with populations exceeding 250,000 contributed to 40.4% of reservations and 39.4% of sales.