France real estate market faces falling prices and rising mortgage rates

The French real estate market is currently navigating a complex period characterized by declining property prices and rising mortgage rates. Data from Insee and Notaires de France indicate that housing prices for older properties fell by 1% in the second quarter of 2026 compared to the previous quarter, with houses seeing a more significant decline of 1.3% than apartments.

While prices are softening, the cost of borrowing is increasing. Mortgage rates are showing signs of upward pressure, with some brokers forecasting a return toward the 4% mark by the end of the year. This trend complicates the market for potential buyers, as the rising cost of credit can offset the financial benefits gained from lower purchase prices.

Regarding household impact, Insee reports that the net effort rate for housing—the percentage of income spent on primary residences—has decreased to 16.8% in early 2024, down from 18.3% a decade ago. This decline is largely attributed to the phased removal of the housing tax. However, this trend does not apply to the most modest households, for whom the effort rate has risen to 32.1%.

Additionally, the cost of borrower insurance remains a significant factor, potentially accounting for up to one-third of the total cost of a twenty-year mortgage. Experts suggest that borrowers have more flexibility than often realized, as they are not obligated to keep the insurance contract offered by their bank.