The real estate market is anticipated to rebound in 2025 after facing significant challenges, particularly for sellers and construction businesses. Industry experts indicate a cautious optimism, with improvements expected in both new and older property markets. Factors such as declining mortgage rates and increased buyer intent, particularly for apartments, contribute to this outlook. However, sellers are struggling to adjust prices, leading to longer selling times and heightened negotiations. Overall, a gradual recovery trend is emerging in the sector.
Anticipated Recovery of the Real Estate Market in 2025
The real estate sector is projected to experience a resurgence in 2025, following a challenging period for sellers, real estate professionals, and the construction industry. The scarcity of contracts has put immense pressure on artisans and small to medium enterprises, pushing many to the brink of bankruptcy. A construction and renovation entrepreneur located near Angers (Maine-et-Loire) acknowledges the current hardships, indicating a mix of forecasts. He predicts a significant downturn at the start of spring, with a promising recovery anticipated in the subsequent months, especially in new construction projects. According to him, the stagnation in the sale of buildable land, often priced excessively due to competitive pressures, contributes to household hesitance in making risky investments amidst prevailing uncertainties.
Insights from Industry Leaders
The Laforêt real estate agency shares a blend of optimism and caution, suggesting that conditions may improve in 2025, particularly in the market for older properties. Yann Jéhanno, the agency’s president, notes that after “two and a half years of tension, the real estate market is beginning to exhibit signs of recovery, although these signs remain delicate.” He emphasizes the unpredictability of this trend: “the coming months will be critical,” with the decisions from the new government and the upcoming 2025 finance law pivotal in solidifying any observed improvements.
Jéhanno points to several encouraging indicators to bolster his argument, urging hesitant buyers to proceed with their plans. He remarks on the recent dip in mortgage interest rates, which now average “3.37%, down from 4.20% a year ago.” In a company announcement, he mentions a nationwide increase in purchase intentions, highlighted by an 11% rise in demand during the last quarter of 2024, particularly in Paris, where the trend approaches 20%. Notably, “apartments are performing better,” with purchase intentions in this category surging by 16%, compared to 9% for houses. While houses remain a desirable option for many, buyers are increasingly prioritizing properties that help maintain their purchasing power.
Industry experts have noted a “reconstitution of supply nationwide,” with the exception of Paris, which has seen an 8% decline. Overall, the supply is expected to grow by 15% in 2024, resulting in a larger pool of available properties for prospective buyers. Over the past year, a 7% increase in individuals initiating their home-buying journey has been observed, particularly in Paris, where transactions under compromise rose by 11%. The typical profiles emerging among these new homeowners include 53% being second-time buyers and 31% first-time buyers, with 16% identified as investors.
The observed upward trends are complemented by a combination of factors, including a “correction of prices,” indicating a slowdown. By the end of 2024, if trends hold, price reductions are expected to decelerate from -4.5% at the end of September to -3.6% on a year-to-year basis, particularly pronounced in Île-de-France. This translates to a continuous decline in the price per square meter following a surge experienced during the Covid-19 pandemic. Experts assert that after a period of rapid price increases driven by high demand and favorable financing, the real estate market is now undergoing a necessary adjustment.
Furthermore, the average time to sell a property in 2024 has increased by a week, now averaging “97 days to finalize a compromise” post-listing, with a shorter time frame noted in Paris. This duration highlights the discrepancy in market perceptions between sellers and buyers. Sellers often resist lowering their asking prices, unwilling to adapt to new market realities, while buyers adopt a more cautious approach, carefully evaluating the financial implications of their purchases, including local taxation considerations. Laforêt’s team notes that “negotiations are becoming more common, occurring in nine out of ten new home sales now, compared to six out of ten in 2022,” with more significant price variances observed for houses. In summary, “the recovery appears to be headed in the right direction.”