<p>The real estate market in Île-de-France is faltering, and the figures are relentless. This sector, once a robust pillar of the regional economy, is now caught in an unprecedented downward spiral, where transactions are collapsing, and prices continue their steep decline. The walls of the capital and its surroundings, once synonymous with stability, are cracking under the combined effect of soaring interest rates, economic uncertainty, and buyer reluctance. In this tense climate, where the cards are being reshuffled, buyers are taking control while sellers struggle to adapt.</p> 
<h2 id="h-un-effondrement-inexorable-des-prix-en-ile-de-france">An inexorable collapse of prices in Île-de-France</h2> 
<p><a href="https://www.cointribune.com/en/economy-the-french-real-estate-market-is-in-turmoil/" target="_blank" rel="noreferrer noopener">The French real estate market is experiencing an unprecedented crisis</a>, characterized by a widespread devaluation of properties and a collapse in transactions. In Île-de-France, the prices of old apartments have plunged by 6.7% year-on-year in the second quarter of 2024, <a href="https://www.capital.fr/immobilier/immobilier-les-prix-continuent-de-degringoler-dans-les-departements-d-ile-de-france-1502080" target="_blank" rel="noreferrer noopener">according to the latest data from the notaries of Greater Paris</a>. In Paris, the square meter is now traded at around 9,450 euros, a significant drop compared to the 10,860 euros recorded in 2020. This decline is not limited to the capital: the inner suburbs are experiencing an even more marked decline, with a drop of 7.4%, while the outer suburbs are slightly more resilient with a decrease of 5.5%. Far from being merely cyclical, the phenomenon reflects a market where access to credit has become more difficult and households are struggling to obtain financing due to the rapid rise in interest rates.</p>
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<p>Houses are not immune either. In the inner suburbs, prices have dropped by 8.5% over the past twelve months, a plunge that underscores the depth of the crisis. Hauts-de-Seine remains the most expensive department with an average price of 646,400 euros for a house, while Seine-Saint-Denis shows prices that are half as high. The outer suburbs, meanwhile, are experiencing a more moderate but continuous decline in house prices, averaging 300,900 euros. These figures reflect a sluggish market, where demand has collapsed and transactions have fallen by 19% in one year. The slowdown in activity puts buyers in a strong position, allowing them to negotiate significant discounts. But this situation only exacerbates the tension in a market already weakened by inflation and economic uncertainty, raising serious questions about the capability of Île-de-France’s real estate to regain its former dynamism.</p> 
<h2 id="h-une-crise-durable-et-des-repercussions-profondes">A lasting crisis with profound repercussions</h2> 
<p>Beyond the raw figures, the real estate crisis in Île-de-France reveals a deeper unease, rooted in an imbalanced market dynamic and uncertain economic prospects. Sales continue to collapse, with an 18% drop year-on-year and a 38% drop in just two years for old homes. This decline spares no category, with houses suffering an even more severe retreat, falling by 44% since 2022. The notaries of Greater Paris speak of a “sluggish” market, hit by historically low volumes, reminiscent of the darkest hours of the subprime crisis. The causes are multiple: the rise in interest rates, which erodes household purchasing power, and the reluctance of banks to grant loans, depriving the market of new entrants. In this gloomy climate, sellers forced to sell their property often have to accept significant discounts, while buyers remain in a waiting position, looking for a possible price stabilization.</p> 
<p>While prices continue to fall, the pace of this decline has slightly slowed and offers some timid signs of relief. Notaries observe that the price contraction, although still present, tends to moderate compared to previous quarters. However, this calm is not synonymous with a recovery. Household solvency remains weakened by high financing costs and persistent inflation, limiting any notable improvement in activity. The outlook for the coming months remains mixed: on the one hand, a possible rate cut could support a tentative revival of transactions; on the other, economic and political uncertainties continue to weigh heavily on the morale of investors and households. Moreover, the necessary adjustments to rebalance the market seem far from being achieved, casting doubt on the real ability of Île-de-France’s real estate to rebound.</p> 
<p><em>The real estate market in Île-de-France is at a critical turning point, caught between a price drop that seems to be running out of steam and activity that is struggling to regain momentum. While signs of stabilization are appearing, they are not yet sufficient to reverse the underlying trend of a sector in search of benchmarks. The current crisis will not be resolved by simple price adjustments; it will require a complete redefinition of credit access conditions, a restoration of confidence, and <a href="https://www.cointribune.com/en/inflation-declining-in-france-why-this-return-below-2-may-not-last/" target="_blank" rel="noreferrer noopener">a more predictable economic environment</a>.</em></p>

Economy: Why Is Real Estate In Île-de-France Continuing To Decline?

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