Our 2023 French Property & Mortgage Predictions

Property prices were already slowing down in the final quarter of 2022, according to data from Notaires de France-INSEE. The housing market remained dynamic towards the end of the year, but average transactions had slowed, with the Notaires de France figures showing an annual 1.1 million sales carried out (as of September 2022) in comparison to the 1.2 million sales recorded at the same time in 2021. During the same time period, house prices rose by an average of 8.6% across France in 2022, with apartment prices rising an average of 4%.

Moving into 2023, the Fédération Nationale de l’Immobilier (FNAIM) has predicted an average 5% decline in property prices over the year. However, much of this decline is likely to be concentrated in larger cities – prices are already beginning to fall in Paris, Lyon, Nantes, and Bordeaux. For existing properties in rural areas, prices are expected to slow, but with demand for rural properties still high and more and more French buyers seeking to purchase outside of the larger cities, a notably fall in prices seems unlikely, especially in areas where demand still outstrips supply.

All of this comes after a few years of soaring prices – new-build properties in France have risen around 18% over the past three years, and existing properties around 23%.

Joanna Leggett of Leggett Immobilier tells us that the question they were asked the most in 2022 was, “Can I still move to France after Brexit” (the answer, in case you’re wondering, is “of course, and thousands are doing it right now!”). Similarly, fears of Brexit slowing down French property sales among British buyers do not seem to have come to fruition, and Joanna tells us that, in fact, there may even be increased interest from Brits who, in the wake of the pandemic and rising inflation, are prioritising buying an overseas property closer to home.

With the trend towards remote working, many Brits are also looking for second homes to serve as a remote office for a few months of the year, a trend she believes will continue through 2023. Her top tip: make sure you test the broadband speed of the property you are buying (you might also want to read our guide to fibre internet in France, too!).

It’s certainly a good time for cash buyers in France right now, but that doesn’t mean securing a French mortgage is off the table. However, with interest rates continuing to soar, mortgage lenders are tightening their lending criteria across the board. In October 2022 mortgage approvals were down 40% in comparison with the previous month.

In the final quarter of 2022, the Banque de France announced that the legal maximum mortgage rate was set at 3.05% for a loan of 20 years or more, while in July ’22, the average rate was 1.45% compared to 1.12% at the end of 2021. Moving into 2023, the upward trend continues, with rates soon set to reach 3.5% and experts predicting that they will pass the 4% mark this year.

For foreign buyers, the market has tightened even more – expect a minimum loan amount of €150,000 with a loan-to-value (LTV) of 80% for British buyers (i.e. a minimum property purchase of €180,000 with a deposit of €30,000) and a minimum loan amount of €250,000 with a maximum LTV of 50% for US and other non-EU buyers (i.e. a minimum of a €250,000 deposit and a minimum property price of €500,000).

With reports of fewer mortgage loan applications being approved and eligibility criteria tighter than ever, we highly recommend seeking expert advice if you’re looking to secure financing for a French property. Filling in our mortgage application form is a good place to start.

While talk of falling property prices and a potentially slowing market might make you think twice about selling, it remains a good time to sell in France, especially for rural properties. In fact, if you are thinking of selling, you might want to take advantage of the appetite for rural buys sooner rather than later. Read our article Why NOW is the Best Time to Sell Your French Property.

The rising cost of living, most notably increases in energy tariffs and the taxe foncière property tax, will have an impact on all homeowners in France. Second-home owners, who remain liable to pay the taxe d’habitation (now abolished on all primary residences) in addition to the taxe foncière are likely to feel the effects even more.

Purchases of second homes in rural areas (by both foreign and French buyers) soared post-pandemic, but with demand exceeding supply in many French regions, authorities are looking at ways to discourage second-home owners from maintaining empty properties. In zones tendues (areas with a known housing shortage), authorities have the right to increase taxe d’habitation by up to 60%, and from 2023, several new areas will join the list of zones tendues.

One way you could offset costs as a holiday-home owner in France, Joanna says, is to “consider offering seasonal rentals. They can help cover all of the running costs and give you a bit extra to treat yourself when you come out. Ask Leggett Property Management for a free estimate of what you could get.”

One thing is for sure: the French property market is set to be just as dynamic in 2023 as it has been in previous years. Here are three things you can do right now, for free, that will help you stay on top of it:

• Subscribe to FrenchEntrée’s weekly newsletter – not only do we give you access to all the latest news, property updates, and FrenchEntrée articles in our weekly News Digest, but you’ll be the first to hear about our free webinars, property exhibitions, and other events.
• Subscribe to the FrenchEntrée YouTube channel, where we publish twice-weekly Q&As with experts on everything related to buying property and moving to France. We have lots of exciting new video content coming in 2023, so ring the notification bell to make sure you don’t miss out!
• Sign up for your free tickets to the French Property Exhibition in London on January 28^th and 29^th, 2023. This is your chance to chat directly with estate agents, currency exchange specialists, international tax and financial advisors, and more. Plus, the FrenchEntrée team will be on-hand to answer all your questions.