Real estate market review in 2024 and outlook for 2025

2024 Review: The End of the Market Downturn Cycle

In 2024, the real estate market marked the end of a downward cycle that began in 2022. Prices fell moderately (down less than 10% on average over two years), while interest rates began a significant decline of almost 1 point, giving borrowers increased purchasing power.

This partial re-solvency of households, driven by an increase in wages (+10% on average over two years) and a normalized credit offer, has allowed a gradual return of demand. Transaction volumes were established over the year at a low level of 770.000, for 1,2 million in 2022. Despite a still fragile context, these signals demonstrate a gradual return to supply/demand balance.

A favorable context for borrowers

A notable fact at the end of the year was that real estate rates for the best profiles fell below 3% over 25 years, compared with a rate of 3,25% for the 10-year OAT (government bond). This situation illustrates a particularly advantageous context for individuals. Banks are intensifying their competition to achieve ambitious acquisition targets (+30% for some) after two years of reduced growth, and are seeking to attract the most solvent borrowers.

For Pierre Chapon, President of Pretto: "Between real estate prices that are still attractive and often negotiable for borrowers with a good record, and increasingly advantageous interest rates, the time is particularly favorable to purchase real estate. We recommend that borrowers get well informed, compare bank offers and associated conditions and negotiate sale prices, this should allow them to realize their project under very good conditions."

2025: barring a major shock, a favorable context for the market

For 2025, uncertainties remain, particularly related to the French budgetary context and a possible decorrelation between real estate rates and the OAT, which could complicate the trajectory of loans in the medium term. Overall, the outlook remains favorable for borrowers, with a stabilized market and banks actively conquering.

Pretto anticipates a continued decline in rates to reach 2,6-2,8%, thanks to a clear direction of European monetary policy and a controlled inflationary environment. This adjustment should further stimulate demand for mortgage credit, in particular via sustained public policies, such as the expansion of the PTZ.

For Pierre Chapon: "In 2025, we believe in a sustainable rebalancing of the real estate market. More than ever, Pretto is committed to supporting households in their financing journey by simplifying access to credit and anticipating the new challenges of a constantly changing market. Our ambition is to remain a key player, capable of combining technological innovation and human advice to meet the expectations of French people with a real estate project who must deal with a profoundly changing environment."

Illustrative image of the article via Depositphotos.com.