France’s residential real estate market is undergoing a continued price correction, with overall prices for older homes dropping by 0.8% year-over-year during the second quarter of 2026, according to the official Notaires-Insee index. The decline follows a period of stabilization after a broader market correction began in April 2022, driven primarily by falling values for houses as buyers face tighter household budgets and rising borrowing costs.
### Housing Market Correction Highlights Price Divergence
According to the Notaires-Insee index, the nationwide dip in older housing prices was primarily driven by houses, which saw values fall by 1.3% over the year ending in June 2026. By contrast, apartment prices remained largely flat, edging down by just 0.1% across the country.
The division between house and apartment performance is heavily influenced by building quality and regulatory requirements. Loïc Cantin, president of the Fédération nationale de l’immobilier (Fnaim), noted that houses face distinct pressures from energy performance regulations. Poor ratings on diagnostic energy performance assessments directly weigh down the market value of houses, according to Loïc Cantin.
Geographic disparities also define the current market landscape. In Île-de-France, apartment prices actually gained 0.3% over the year to average 6 130 euros per square meter—and 9 560 euros per square meter in Paris proper, based on figures from the chambre des notaires du Grand Paris. Meanwhile, houses dragged the Parisian area down with a 1.5% drop. Across other French regions, overall property prices declined by 1% year-over-year, with losses once again concentrated more heavily on houses than on apartments.
### Transaction Volumes Stabilize Amid Economic Uncertainty
Market activity has plateaued after a brief recovery phase. Between July 2025 and June 2026, the market recorded 958 000 transactions for older homes, matching the volume levels tracked between April 2025 and March 2026.
Insee data shows that annual transaction volumes had previously rebounded between October 2024 and December 2025, following a prolonged slump that started in April 2022 when interest rates first began climbing. Since the start of 2026, however, transaction levels have plateaued. Fnaim projects total sales for the full year of 2026 to reach between 900 000 and 920 000 units, representing an anticipated 5% drop in volume compared to 2025.
Industry leaders point to a mix of international and domestic headwinds for the slowing momentum. According to Elodie Frémont, president of the real estate statistics commission for the notaires du Grand Paris, the current market is weighed down by national political uncertainties. Frémont stated that real estate operators are closely watching the presidential election campaign and candidate announcements, which have introduced caution among hesitant buyers.
### Rising Mortgage Rates and Financing Pressures
Financing conditions continue to exert downward pressure on property valuations. According to Banque de France data, the average interest rate for new home loans climbed to 3,27% (excluding insurance) in June 2026, returning to levels last seen in February 2025. For loans spanning 20 years or more, the all-inclusive borrowing rate averaged 3,97% during the second quarter.
The renewed upward pressure on borrowing costs stems partly from geopolitical tensions. Loïc Cantin of Fnaim highlighted that the war in the Middle East acted as a major trigger, driving up hydrocarbon prices since late February and sparking fresh inflationary pressures that push interest rates upward.
With tighter financing budgets, buyers are increasingly using purchase prices as their primary negotiation lever. Real estate agency Foncia reported that purchase negotiations became virtually systematic as buyers adjusted their offers to match their borrowing capacity. Market participants now await upcoming monetary policy decisions from the European Central Bank to gauge the future trajectory of lending rates and real estate demand.
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