The French Housing Market

A dynamic year end for the French residential property investment market

After reaching a record in August 2021, the number of second-hand home sales remained particularly high (around 1.2 million) through to May 2022. Levels have since gradually fallen to close to 1.1 million (1,109,000 in December).

The new homes market is still struggling with further reductions in construction starts, reservations and the number of properties coming onto the market over Q4 2022 with increases in the volume of availability for the last 3 quarters.

There may have been an increase in the INSEE price index for second-hand apartments over Q4 2022 with levels reaching a record of 132.9 for mainland France, but there was a slowdown in activity with an increase of just +0.2%. Second-hand apartment prices therefore rose by +3.6% over 2022 as a whole. Prices for new apartments continued to rise with Q4 2022 levels reaching an average of €4,780 per sq m (+5.4% year on year).

With over €1 billion in investments over Q4, investment activity was strong towards the end of the year. 2022 therefore drew to a close with a full-year investment volume for block sales of €5.6 billion; this represents a -23% year-on-year decrease but was still +9% higher than the average for the last 5 years.

Traditional residential housing ended the year with a 76% market share and €4.3 billion in investments, representing a -31% year-on-year decrease, although this was in line with the average. Conversely, with €1.3 billion in investments, managed assets posted a +27% year-on-year increase in performance with almost a quarter of the overall investment volume.

As was the case for other asset classes, yield correction was seen for residential assets in 2022; this was due to rising bond yields and tighter finance terms.