The French real estate market in 2024 is characterized by three simultaneous movements: a gradual easing of credit rates after two years of increases, a price correction that varies by region, and a tightening of regulations regarding the energy performance of rental housing. These three axes are restructuring decisions related to buying, selling, and rental investment.
Energy Performance Diagnosis Reform and Ban on Renting G-Class Housing
The energy performance diagnosis underwent a technical modification in 2024, often overlooked by buyers and landlords. The calculation method was adjusted for housing units smaller than 40 m², which had been penalized by a method that related certain consumption to a small area. Some owners thus obtained a better rating without undertaking any renovations.
This correction has a direct impact on the resale value and rental capacity of studios and one-bedroom apartments in city centers. A property reclassified from G to F gains several years of legal rental before the next ban deadline.
The regulatory timeline remains the structuring factor for any rental investor. Since January 1, 2025, G-class housing can no longer be rented under a new lease, renewal, or tacit extension. F-class housing will be affected in 2028, and E-class housing in 2034.
This timeline alters the liquidity of part of the older housing stock well beyond the issue of rates. The information from the Alias Immo website allows tracking of these regulatory developments over the months.
- A G-class property that has not been renovated loses its immediate rental capacity and sees its sale price decrease mechanically, as buyers factor in the cost of renovations into their offers.
- Condominiums where insulation work falls under common areas pose a specific problem: a single owner cannot always improve the rating of their unit.
- The reform of the calculation for small units creates a window of opportunity for investors able to identify reclassified properties before the market integrates them into prices.
Mortgage Rates in 2024: Easing Trajectory
After reaching levels close to their peak at the end of 2023, mortgage rates began to decline in 2024. This gradual decrease has restored purchasing power to borrowing households, even though levels remain higher than those of the 2020-2021 period.
Borrowing capacity has partially recovered thanks to this easing. For the same income and loan duration, a household can borrow more than a year earlier. This improvement has helped stabilize the number of transactions after a significant contraction.
The credit market remains framed by the rules of the High Council for Financial Stability, which caps the debt-to-income ratio and the maximum repayment duration. These constraints limit the acceleration effect that the decrease in rates could have on demand.
What the Rate Decrease Does Not Correct
The easing of rates does not fully compensate for the increase accumulated between 2022 and the end of 2023. First-time buyers with limited down payments remain penalized. The personal contribution required by banks has increased during this period, and this trend is not reversing as quickly as rates.
For rental investors, the profitability calculation now includes the cost of energy renovation. An older property with an attractive rate but classified as F or G often generates a total cost that exceeds that of a better-rated property purchased slightly more expensively.
Real Estate Prices in France: Uneven Correction by Region
The volume of transactions has significantly decreased compared to the years 2021-2022. This contraction has led to a price correction, but its magnitude varies considerably from one area to another.
Île-de-France has experienced a more pronounced price drop than the national average. Major regional metropolises have fared better, supported by strong local demand and price per square meter that left more room for buyers. Medium-sized cities well-served by trains continue to attract buyers seeking space, a trend that began during the health crisis and has not reversed.
New Real Estate: A Market Under Pressure
The new housing sector has experienced a more severe contraction than the older market. Sales of new homes and the number of building permits have sharply declined. Developers have reduced their commercial launches due to a lack of solvent demand, which prepares for a supply deficit in the coming years.
This scarcity of new properties mechanically enhances the attractiveness of renovated older homes. An older property with a correct DPE becomes a credible alternative to new housing, provided that the condominium is in good condition and that charges remain controlled.
Commercial Real Estate and Bank Financing: An Under-Supervised Angle
Residential real estate attracts media attention, but the commercial segment (offices, shops, warehouses) is undergoing its own transformation. Telecommuting has permanently reduced the demand for office space in certain business districts, while last-mile logistics supports the demand for urban warehouses.
The Prudential Control and Resolution Authority (ACPR) monitors the financing of commercial real estate by French banks. This segment presents specific risks: vacancy cycles are longer, and converting an office building into housing faces heavy technical and regulatory constraints.
- Vacancy rates in peripheral offices have increased, which weighs on asset valuation and on bank balance sheets exposed to this segment.
- Logistics warehouses and activity premises remain sought after, driven by the growth of online commerce.
- The conversion of obsolete offices into housing is technically feasible but rarely profitable without public aid, due to the cost of compliance.
The year 2024 will mark a turning point for the French real estate market, not through a sudden reversal, but through the accumulation of regulatory, energy, and financial constraints that redefine what constitutes a “good” investment. The DPE is no longer a secondary administrative document: it has become a valuation criterion as crucial as location.
