After a large increase in residential sales in France in 2021, the situation deteriorated considerably last year, according to a new report by Knight Frank.

The firm says that while the number of property sales in the Greater Paris Region did actually increase by 3% last year, nationally, properties sold in 2022 fell by 6% for second-hand homes and by 31% for new-build homes (-14% in Paris).

Construction started on less than 60,000 new units in Paris last year, down 11% compared to 2021. The investment market also slowed with €5.4bn invested last year, down 24% compared to 2021. However, the collapse in investment intensified in the second half of last year, with H2 levels down 47% on a year earlier.

Rising interest rates disrupting the market
The average mortgage rate in France was 2.82% at the end of February, for mortgages of 20 years or more, up from 1.10% in February 2022. Knight Frank says that this rapid rise in mortgage rates will continue this year, excluding a growing number of potential buyers, especially first-time buyers, and those with little or no deposit.

As a result, the percentage of mortgage refusals have soared from 1-2% over the past 10 years to close to 10% of mortgage applications in November 2022.

Landlords need to go green or go home, many are choosing the latter
The quality of a property is becoming increasingly important, according to the report, with energy performance becoming a major criterion, something that will only increase due to the Climate and Resilience Act. Starting this year, the Act requires owners of poorly insulated homes to carry out renovations if they wish to increase the rent of their rental property.