France house prices, trends and housing market analysis

The French housing market is running at different speeds across the country. After a vigorous 2017, with 968,000 pre-owned sales, a 15% increase from the previous year, sales volumes dropped slightly in 2018. Groupe Crédit Agricole predicts that 2019 will be a relatively stable year, without rapid price or lending rate increases and they forecast a slight dip in demand and prices.

Across France, house prices continued to rise by an average of 1.73% yearly. However, Paris saw increases of 6.8% in the first two quarters of 2018. The average price per m2 is € 9,510, twice as much as in Bordeaux or Lyon, with buyers struggling to keep up.  According to asset management advisers, Roche &Cie, the average home size purchased in Paris is 49.8 m2, with an average of less than 62 days sales time. These averages include harder selling properties, such as ground floor and north facing apartments, which are selling at 30% above their real value.

Prices in Bordeaux have stabilized after a 17% increase in 2017, and have even dipped slightly. Meanwhile, Lyon has been seeing 8% increases year- on- year and at this rate prices will probably be on par with Bordeaux soon.  In Ill-de-France, the country’s wealthiest and most populated region, prices rise on average by 2.2% with most buyers purchasing homes of approximately 79.4m2.

Contributing factors

French house prices increased, by 112.5% during the 1997-2007 housing boom. Despite the weakening of the housing market after that, price decreases have been moderate, possibly the result of low interest rates.

With a decade-high economic growth of 2.3% in 2017, France dipped in 2018 following the trend of the euro-zone to 1.6% by December 2018, according to figures recently published by the IMF, but remains a stable economy.

France’s woes are not only linked to the euro zone, where the strong euro and increased oil prices are affecting exports. President Macron has had to implement further reforms, which are already making him unpopular, yet these are not enough to change the direction of the French economy.

Initially, it was believed that Brexit would affect the French property market, but it seems that it has actually boosted demand. According to figures provided by various real estate agencies, long term rentals to British citizens grew stronger after the referendum and even though properties sold to Brits dropped in 2018 (7.812 as opposed to 8.296 in 2916), it is expected that many of these renters will decide to purchase.

The stagnant new-built property market has been given a boost by the PINEL law, introduced in 2014,by offering generous tax relief if investors buy a property and then rent it out for a minimum of six years.


Rental yields

Apartments in Paris are in short supply and owners have no trouble letting them out. However, rental yields in Paris are disappointing. French rental contracts are long-term and there are legal restrictions on raising the rent within the duration of the contract, keeping rent prices relatively stable. As a result, the more popular areas within the city have lower gross rental yields of approximately 4.2% for small apartment and 3.9% for bigger ones.

The slight downturn in prices will offer opportunities for buyers to buy properties that are below market value as the market reaches the bottom of the curve. Properties in need of renovation are often sold at a lower price. The continued low level of interest rates across the euro zone offers favorable investment opportunities and increased rental yields.

The south of France offers rental yields between 7-10%, with 75% of the income coming from weekly, high season summer rentals. The summer season lasts for 12 weeks, after which the property can be rented for the duration of the winter at the normal rental price.

Taxes and costs

France has no restrictions on foreign ownership and most properties are freehold.

Rental income is relatively low in France and foreign residents with a low rental income of €1,500 per month will most likely be taxed at 10%. Capital gains tax for all European citizens, including the French, is at 19% and for non-European citizens at 33, 33%.

French inheritance law is based on strong historical tradition and protects the rights of the children, with limited recognition of the surviving spouse. There have been improvements to the law in recent years as this was a source of concern for foreign investors and their spouses.

The transaction costs of purchasing a home in France can vary from moderate to high. They range between 7.9% -28.99%, with new properties having the highest cost, because of added VAT, which is at 20%.  New properties have a lower registration fee. Real estate agent fees are split between the buyer and seller and range from 3% to 10%.

French tenancy laws are onerous and protect the tenant. The initial rent can be freely agreed and revised yearly, but the increase cannot exceed the INSEE rental index. Contract structure is also restrictive, making older apartments drag behind in rental income.

An unfurnished property rental contract has a minimum, three year term. Furnished contracts can be for one year. On expiration of the contract the landlord may only ask the tenant to leave if he intends to sell or move in himself. In addition, eviction of a tenant can takes time.


All predictions show that the French housing market will remain healthy and stable in the following year. Despite having an unemployment rate which is slightly higher than the EU’s average of 7.1%, it has steadily been dropping from the 2018 level of 9.6%.

Even though France brought down its budget deficit to below the 3% limit required by the EU, it has the highest debt in the euro zone at 97% of GDP.

President Macron is not the most popular person in France at the moment due to the much needed economic reforms which he is trying to implement. Across France the “yellow vests” have for weeks been showing their discontent at some of these policies, but France needs reform if it is to see a strengthening of the economy, with higher employment figures, because its socialist economic structure is holding it back.