Ile-de-France real estate situation in April 2024: activity still weak and annual price drops of 7 to 9%

A market still waiting

Only the Capital stands out, as has been the case for many months, with a slightly more moderate drop in activity (-15% in one year). Outside of Paris, all markets are very affected. In the Inner Crown, sales volumes fell by 25% for apartments and 27% for houses, while in the Greater Crown sales fell by 26% for both types of housing.

Even more striking, sales of old homes from February to April 2024 fell by 39% compared to the same period in 2022 across the region.

Activity remains historically very low in a climate where a wait-and-see attitude reigns. According to the preliminary contracts, the outlook still remains on a downward trend for the coming months but with a deterioration which would gradually be a little less severe.

However, uncertainties are reinforced by the dissolution of the national assembly, a new electoral period and all the possible consequences (political, economic, fiscal and financial) on an already bearish and fragile market.

Annual price drops should moderate in the coming months

The decline in activity continues to weigh on prices.

In one year, from April 2023 to April 2024, Ile-de-France housing prices fell by 8,1%, with a comparable drop for apartments (-8,0%) and houses (-8,4%).

The annual price drops are fairly consistent from one market to another, between 7% for apartments in the Greater Crown and 8,6% for both apartments in the Small Crown and for houses in the Greater Crown.

In Ile-de-France over 3 months, from January to April 2024, housing prices fell by 2,4% (-2,2% for apartments, -2,7% for houses).

However, according to our leading indicators on pre-contracts, prices should change little or increase slightly, depending on the market, between now and August. These developments, very visible on the curves for the coming months, would lead to a slowing of the annual decline by August, particularly in the Greater Crown.

In Paris, the price per m2 of old apartments would change little, going from €9.440 in April (-7,8% in one year) to €9.450 in August (-6,8% compared to August 2023).

In one year, from August 2023 to August 2024, we expect apartment prices to decline by 6,9% in the inner suburbs and 4,7% in the outer suburbs (+1,4% in 3 months from May to August 2024). For houses, prices are expected to fall by 6,2% in the inner suburbs and by 5,2% in the outer suburbs (+2,2% in 3 months from May to August).

Summary of the figures

Projections of old housing prices

Focus: Since 2022, the share of old energy-intensive housing has increased significantly in Ile-de-France

Until 2021, we observed a gradual increase in the weight of older, energy-efficient housing in sales. The share of apartments rated F or G fell from 20% of sales in 2013 to 10,2% in 2021. Houses followed the same trend, although a little less sustained, (21,2% rated F and G in 2013 reduced to around 14% from 2019 to 2021). The transformation, renovation of the stock and a preference for the best-rated housing have undoubtedly led to these slow but steady developments.

But this movement was interrupted. On the contrary, since 2022 the share of sales of energy-intensive housing has increased. The impossibility of renting (Climate and Resilience law) and the prospect of a potential reduction in property prices have undoubtedly pushed owners to get rid of their energy-intensive properties. Furthermore, the latter have found takers. The share of apartments classified F or G, which fell to around 10% from 2019 to 2021, increased significantly in 2022 (19,6%) in a movement which then continues in 2023 (20,5%).

We observe a similar movement for houses, with a surge in the share of sales of energy-intensive houses which goes from 13,9% in 2021, to 21,0% in 2022 then 23,8% in 2023.

At the same time, the share of sales of energy-efficient housing tends to erode. Apartments benefiting from labels A, B or C represented 18,7% of sales in 2021 but only 17,0% in 2022 and 16,8% in 2023. For houses in the same category, we went from 18,5, 2021% in 17,4 to 2022% in 16,8 then 2023% in XNUMX.

This phenomenon is particularly accentuated in the Capital where the housing stock is very old and made up of small-sized housing and therefore poorly rated. The share of housing classified F and G, limited to 20% in 2013, jumped to 30,3% in 2022 then 32,2% in 2023.

Pending changes to the regulations for small homes, the number of rooms in the home has a strong impact on the energy rating

The current method of calculating the performance diagnosis (which brings energy consumption closer to the surface area) must be reviewed by a decree on July 1, 2024 to avoid penalizing small housing.

We actually see an over-representation of small, energy-intensive homes in sales. In 2023, 36,4% of studio sales in Ile-de-France concern “energy strainers” (F or G) and 30,5% were classified E. This leaves barely a third of studio sales. studios benefiting from a DPE between A to D.

At the other end, only 9,6% of large apartments with 4 rooms or more were sold with an F or G label and 28,9% with an E label. 60% of sales of large apartments therefore display a DPE ranging from A to D.

The situation is equivalent for houses.

The change in regulations on DPE which is about to be implemented should therefore allow an improvement in the diagnostics of properties of less than 40 m2 and will probably make it possible to rebalance these data.

It should also be noted that frequent changes in regulations are likely to bias the analyzes of data from DPEs. In fact, current DPEs remain valid for several years despite regulatory changes. Notaries of Greater Paris are therefore required to aggregate data on the same energy labels but calculated using different methods.

Illustrative image of the article via Depositphotos.com.