Ile-de-France real estate situation in February 2024: the deterioration in activity continues as do the price drops

The level of activity is falling again

At the same time, the drop in activity remains a little more moderate in Paris than elsewhere (-23%). On the other hand, for apartments, sales volumes fell by 31% in the inner and outer suburbs. For houses, the decline is a little marked with -25% in the inner suburbs and -29% in the inner suburbs.

The wait-and-see attitude has therefore continued, with historically low activity and a number of sales 30% lower than the average of the last 10 years. The house market is still more affected (-36%) than that of apartments (-27%) compared to this reference period.

The few positive signals that are beginning to emerge - a slight erosion in home loan rates, a little easier access to credit and a monthly payment that has stopped increasing - are still too tenuous and above all too recent to come to influence the sales trend. According to the preliminary contracts, the decline in sales volumes could continue in the coming months at a rate which could be very slightly less sustained than currently.

Strong annual price drops which could ease slightly during the 2nd quarter

In Ile-de-France from February 2023 to February 2024, housing prices decreased by 8,7% (-8% for apartments and -10% for houses). It has been 14 years since we last observed a double-digit annual drop in prices for houses in Ile-de-France.

The downward trend was strong in 3 months from November 2023 to February 2024, with a drop in prices of 3,6% for apartments (-2,6% after adjusting for seasonal variation) and especially of 5,7% for houses (and still -4,2% after adjusting for seasonal variation).

According to the preliminary contracts, prices could then vary less by June. Reading the graphs clearly highlights a certain flattening of the curves for quite a few market segments, and relatively stable or less downward price movements for a few months. These developments naturally require confirmation. As a result, the annual fall in prices could gradually moderate between now and June, while still remaining high, taking into account previous declines.

Paris should stay away from this movement and the price per m2 of old apartments would increase from €9.600 in February 2024 (-7,3% in one year) to €9.360 in June 2024 (-7,6%). In Ile-de-France in one year, from June 2023 to June 2024, apartment prices would fall by 7,3% (compared to an annual drop of 8,7% in February). We expect a drop in prices of 7,5% in the inner suburbs and 6,1% in the outer suburbs. As for house prices, they are expected to fall by 7,7% from June 2023 to June 2024 (as a reminder, 10% annual drop in February), -9,6% in the inner suburbs and -6,7% in the outer suburbs.

Focus: Price drops affected all housing, from studios to houses with 6 rooms and more from 2022 to 2023

The decline in sales pushed down all prices

Last month's notaries' focus highlighted a drop in sales volumes of old housing in Ile-de-France of 25% from 2022 to 2023, a little more severe for large apartments (from -25% to -29% from 3 rooms to 5 rooms and more) than for studios and two rooms (respectively -17% and -23%). At the same time, sales of small houses held up a little better than sales of large houses (-31% for 6 rooms and more).

The Notaries of Greater Paris also questioned price developments by number of pieces to identify possible differences in certain market segments. Prices per number of rooms for apartments and houses were calculated using the Notaries-Insee index method and are in current euros.

It is interesting to note that although occasionally certain influences seem to emerge between sales volumes and prices, there is no generalized correlation between the two.

Apartment prices fall further in one year for studios and 2 rooms

Annual drops in apartment prices in Ile-de-France oscillate between -3,8% and -8,3% depending on the number of rooms and the major geographic sectors, between the 4th quarters of 2022 and 2023.

They are very slightly more marked on small accommodation (-7,4% for studios and -7,1% for 2 rooms in Ile-de-France). This is particularly true in Paris (-7,8% for studios and -7,2% for two rooms).

For studios in Paris and the Near Crown, these price reductions, more pronounced than elsewhere, may have helped to encourage sales because the latter are the market segment which has best resisted the drop in activity. last year. The situation is the opposite in the Greater Crown where studios show the most moderate drop in prices in Ile-de-France (-3,8%) At the same time, the price drops are slightly less severe for large apartments in the Ile-de-France region. as a whole (from -6,3% for 3 rooms to -6,1% for 5 rooms and more) and for quite many market segments (decline limited to 5,2% for 5 rooms and more in Paris for example).

These major trends by number of rooms are largely reflected if we analyze price developments over 5 years for apartments.

First, recent cumulative declines have not yet offset increases in previous years. There are still, in current euros, generalized price increases over the past 5 years but which have gradually reduced (5,1% in Ile-de-France) and remain higher in the Greater Crown (+8,8%) than in the inner suburbs (+7,5%) and especially in Paris (+2,1%) where the price drops were earlier. In the Capital, moreover, studio prices have not changed in 5 years.

In one year, house prices fell by 6,8% in Ile-de-France, by 5,8% in the inner suburbs and by 7,3% in the Greater Crown.

As for apartments, the downward trend is generalized but with slightly different developments in the Lesser and Greater Suburbs. In the inner suburbs, the prices of small houses have fallen little (-2,4% for 3 rooms and less), perhaps due to the narrowness of this market or the possibilities of transformation attached to these properties (expansion or new construction). On the other hand, large houses with 6 rooms or more see their prices drop by more than 7%.

In the Greater Crown, developments are more homogeneous between the different types of houses. Large houses are resisting the drop in prices a little better (-6,5% approximately) But at the same time, sales of 6 rooms and more fell by 31% from 2022 to 2023, compared to a drop of 28% for the whole houses in Ile-de-France.

Prices still remain 10% higher than they were 5 years ago overall in Ile-de-France, as well as in the inner and outer suburbs. The largest increases are observed in houses with 6 rooms or more.

Illustrative image of the article via Depositphotos.com.