IMMONEWS #2 - Property market news February 2025

Key Trends in the Property Market

February 2025 marks a period of transition for the property market. Between stabilising interest rates, new tax measures and evolving obligations for estate agents, several signals indicate that the sector is attempting to readjust after a difficult 2024.

1. Interest Rates and Access to Credit: Towards a Lasting Easing?

In February 2025, the overall trend in mortgage rates remained at a relatively stable level, with some targeted decreases. According to the Observatoire Credit Logement/CSA, the average rate for mortgage loans taken out in January 2025 fell to 3.24%, down 8 basis points from December 2024. However, some banks slightly raised their rates at the end of January (increases of around 0.05 to 0.1 percentage points) in response to tensions on 10-year government bonds, which could signal a pause in the continuous decline observed in recent months. Despite these occasional adjustments, the best borrower profiles are starting to obtain rates below the symbolic 3% threshold for the shortest terms, indicating a slight breath of fresh air for buyers.

The impact of these more favourable rates is being felt in mortgage loan production, which is gradually recovering. After hitting a low of just 6.8 billion euros in new loans in February 2024, monthly production rose to 11.6 billion in December 2024. This volume remains well below the boom years of low rates but indicates that the worst of the credit contraction has passed. On the banking side, lending conditions remain strict. Borrowers present a higher average personal contribution (+3% over 2024) and higher incomes (+1.7% over 2024) in order to secure their financing. In other words, despite the easing of rates, lenders continue to demand creditworthy profiles and strict compliance with HCSF standards (maximum debt-to-income ratio of 35%, limited loan term), maintaining selective access to credit. Overall, these factors paint a picture of a credit market more favourable than a year ago, but still far from full easing: well-prepared borrowers can take advantage of current rates, while more modest households still face tightened criteria.

2. Regulatory and Tax Changes Affecting the Property Market

February 2025 is marked by the entry into force of the 2025 Budget, adopted in mid-February, which introduces several important measures for the property sector. First, the Interest-Free Loan (PTZ) is to be expanded: from spring 2025, it will once again be available across the entire country and for the construction of new individual houses, having previously been restricted to apartments in high-demand areas. This new nationwide PTZ, intended for low-income households, is expected to be operational from April 2025 and will remain in place for 3 years. Furthermore, the Finance Act gives departments the option of increasing transfer duties (notary fees) by 0.5 percentage points for three years, raising the maximum rate from 4.5% to 5%. In practical terms, this could add approximately 1,000 euros to the bill for a purchase of 200,000 euros. However, an exemption has been provided to protect first-time buyers: for the purchase of a primary residence, the portion of value up to 250,000 euros will not be subject to this increase in transfer duties.

Other tax provisions change the equation for property owners and investors. Family assistance for buyers has been strengthened: the 2025 budget introduces an exemption from gift tax, up to 100,000 euros per parent (and 300,000 euros in total per beneficiary), for sums given to a child or grandchild and used for the purchase or construction of their primary residence. This measure, valid until the end of 2026, also encourages the financing of energy renovation works -- an important lever given that, since 1 January 2025, it has been prohibited to let properties rated G for energy performance. Indeed, the entry into force of this legal obligation (which foreshadows the prohibition of F-rated properties in 2028) is pushing many landlords to undertake renovations to prevent their "thermal sieves" from being removed from the rental market. In terms of renovation subsidies, it is worth noting a reduction in the budget allocated to the MaPrimeRenov programme: it has been cut by one billion euros compared to 2024, which could slow down certain energy renovation projects.

The tax framework for property investors is also evolving. Owners renting under the non-professional furnished letting scheme (LMNP) on the actual expenses basis now face a heavier capital gains regime: the Finance Act removes the ability to deduct past depreciation from the capital gains calculation on resale. In other words, the taxable base will be higher and capital gains tax will increase accordingly, except for certain properties (student residences, senior living, etc.). This change could discourage some investors from selling in the short term. Finally, the government has tightened the rules for short-term furnished tourist lettings (such as Airbnb): mandatory declaration of the rented property, a less favourable new tax allowance schedule (only 50% if the property is classified as "meuble de tourisme", 30% otherwise) and a requirement to present an EPC to tenants, while mayors gain greater powers of oversight. All of these regulatory and tax adjustments, coming into force or announced in February, aim to align the property market with the State's environmental and budgetary objectives while attempting to revive construction and protect the most vulnerable buyers.

3. Property Market Dynamics

The existing property market has gone through a difficult period in early 2025, although signs of improvement are emerging. Sales volumes fell sharply over the past year: there were 778,000 transactions over the 12 months to the end of November 2024, a new low reflecting a 12% year-on-year decline and a -35.6% drop from the August 2021 peak (1.208 million). This slump, caused by the surge in interest rates in 2022-2023, has held back many purchase and sale projects and severely impacted property professionals. Nevertheless, the market slowdown appears to be coming to an end: after significant corrections in 2024, the decline in prices is tending to moderate. In the third quarter of 2024, average prices still showed an annual decrease of -3.9% (i.e. -6.4% in real terms when adjusted for inflation). But according to French notaries, preliminary contracts signed at the end of 2024 suggest that prices are stabilising in February 2025. In other words, the phase of rapid price falls could be pausing at the start of spring.

Indeed, some leading indicators show a positive stirring at the start of the year. In January 2025, the LPI barometer (Lapeyre/IAD) notes that prices for existing apartments have risen again in 42% of cities with over 40,000 inhabitants (53% of provincial cities, even 19% in Ile-de-France). Across the country as a whole, the price of existing houses reportedly rose by +0.6% year on year in early 2025 -- a notable reversal after the declines of 2024. Despite an economic and political context that remains uncertain, sales volumes are also showing signs of improvement year on year (+3.2% in January according to the same source). These elements suggest that the market may have reached a floor and is beginning to show signs of recovery, at least in certain attractive areas.

For the months ahead, caution remains advisable but seasonal and cyclical factors encourage moderate optimism. Historically, activity picks up in spring: after the winter lull, transactions tend to rebound from March-April, driven by warm-weather moves. If interest rates remain subdued and the new measures (expanded PTZ, tax incentives) restore confidence among some buyers, the market could consolidate its stabilisation in March 2025. Professionals anticipate a gradual recovery, without excess, with prices that could fluctuate around equilibrium in many regions. However, this nascent recovery remains fragile: an unexpected rise in borrowing rates or an economic shock could once again curb demand. In summary, February 2025 closes on a property market in transition, between a soft landing after the 2024 correction and the first stirrings of a new cycle. March's indicators will be closely scrutinised to confirm whether the trend is heading towards lasting stabilisation, or even a slight rebound, or whether the market remains at the mercy of economic uncertainties.

4. The New-Build Housing Crisis

One of the most concerning issues in February 2025 is the new-build housing crisis in France. The 2024 figures proved alarming: only 111,550 new homes were sold to individuals over the year (combining approximately 50,800 individual houses and 60,750 apartments from developers), representing a decline of around 10% compared to 2023. This volume especially represents a drop of nearly 50% compared to the long-term average of annual sales. As a direct consequence, the construction industry experienced serious difficulties: numerous projects were cancelled or delayed, property developers went bankrupt, and thousands of jobs were lost in the sector in 2024. Pascal Boulanger, president of the Federation of Property Developers (FPI), does not hesitate to describe 2024 as the "worst year for new-build housing" and has been raising the alarm for months. For him, the rise in interest rates was the catalyst for a latent crisis that "made everything explode" after years of weakening in the sector.

Behind the unfavourable economic climate (end of cheap money, construction cost inflation), structural problems also hinder the production of new housing. The main bottleneck concerns building permits: according to the FPI, many mayors issue far fewer permits than their PLUs (local urban planning schemes) provide for, achieving on average only 65% of construction targets. In rural areas, elected officials are sometimes held back by the ZAN law (zero net artificialisation) which limits urban sprawl. Conversely, in major conurbations, some municipalities are reluctant to densify or face legal challenges from local residents, blocking projects. Faced with these obstacles, developers are beginning to fight back in the courts: every refusal deemed unjustified is now the subject of a systematic administrative appeal. This litigation strategy is bearing fruit, with developers claiming to win 86% of cases against illegal refusals of building permits. Ironically, some mayors even benefit from this: overruled by the court, they can allow projects to proceed while having shown their constituents that they attempted to oppose them. This climate of local tensions illustrates the difficulty of reconciling the urgency to build (to meet housing demand) with environmental constraints and local resistance.

Despite this very bleak picture, some glimmers of hope appear on the horizon for new-build housing. On one hand, the recent improvement in credit conditions -- with falling borrowing rates since late 2024 -- could restore purchasing power to households and revive certain new-build acquisition projects. On the other hand, the government has recognised the severity of the situation and is beginning to act. The first measures of the 2025 housing plan, although still modest, are moving in the right direction according to professionals. The expansion of the PTZ across the entire country, mentioned above, aims to make more buyers of new homes solvent. Similarly, the temporary exemption of family gifts to help a relative purchase a new property is seen as a welcome boost, though potentially insufficient. At a press conference on 27 February, representatives of the Housing Cluster of the French Building Federation confirmed this dual assessment of alarm and hope: 2024 was a historically bad year, but 2025 could see a fragile recovery thanks to the easing of financing and emerging public initiatives. Nevertheless, this recovery has yet to materialise on the ground. Professionals point out that no scheme has replaced the Pinel incentive (the main tax advantage for new-build buy-to-let investment) which has now expired, which risks continuing to weigh on the private investor segment. In 2024, sales of new homes to individual investors already fell by around 12%, and the absence of a replacement incentive in 2025 could prolong this exodus. Furthermore, high construction costs prevent developers from significantly lowering selling prices despite weak demand: in 2024, new-build property prices barely budged (only -0.7% year on year for apartments, -4.2% for houses), as land charges, material prices and environmental standards maintain incompressible price floors.

5. Yvelines: What Local Solutions for Housing?

In Yvelines, the property news in February 2025 was marked by a significant local initiative to address housing challenges. On 6 February 2025, the Yvelines prefecture organised a departmental housing symposium, bringing together numerous stakeholders: municipal elected officials, developers, social housing providers and State representatives, all mobilised to find solutions tailored to local needs. This mobilisation echoes the construction crisis affecting the Paris region and the rest of the country, and in particular the difficulties many Yvelines municipalities face in meeting their new housing targets. The stated objective of the symposium was to reflect on "concrete and local solutions" to ensure sufficient housing supply in the department.

Several avenues for action emerged from the roundtable discussions held during the event. Among the solutions discussed was the upward extension of existing buildings to create additional housing without consuming new land, thereby preserving natural spaces. Participants also emphasised the need to better utilise the existing housing stock: for example, by encouraging the occupation of currently under-occupied individual houses (following the departure of children or bereavement) to optimise the use of already-built housing. The promotion of the Bail Reel Solidaire (BRS - Solidarity Ground Lease) was mentioned as a means of helping low-income households to become homeowners in Yvelines by separating land ownership from the building. Additionally, the symposium highlighted the importance of improving social housing management: better dialogue between social housing providers and local authorities would accelerate the allocation of vacant social housing units and smooth residents' housing pathways. Finally, it became apparent that promoting the acceptability of new property projects among local residents was crucial. Mayors shared feedback on successful developments achieved through consultation with residents, demonstrating that it is possible to build while addressing environmental and quality of life concerns.

The Yvelines prefecture concluded the symposium by welcoming a collective willingness to tackle the housing problem. This unprecedented event illustrated the ability of local stakeholders to come together around pragmatic and innovative solutions tailored to the department's specificities. Whether through measured urban densification, bringing unused housing back to market, or better coordination of local policies, the shared objective is that every Yvelines resident should have access to quality housing suited to their needs. This local news shows that in Yvelines, as elsewhere, the housing question remains a priority at the start of 2025 and is generating broad mobilisation to reconcile demographic growth, territorial solidarity, and the ecological transition of the built environment. The concrete results of these discussions will be awaited in the coming months, through potential pilot projects or new local initiatives arising from this symposium.

6. New Training Requirement for Estate Agents

Under this decree, every estate agency employee must now meet one of the following two conditions in order to be authorised by an agent holding the T card:

• Demonstrate at least 18 months of professional experience in a similar role, ensuring supervised practice of the profession.
• Complete a specific 42-hour training programme, comprising 28 hours of in-person training and 14 hours of remote learning, in order to acquire the essential skills for practising the profession.

What Impact for Professionals?

This reform has been welcomed by the major federations in the sector, such as FNAIM, which have been advocating for years for better structuring of skills in the property industry. It should help to ensure a more consistent level of qualification and strengthen the profession's credibility in the eyes of clients.

However, it will also have practical consequences for estate agencies, particularly in terms of recruitment. Until now, many agencies hired employees with no prior training, taking it upon themselves to train them on the job. With this new requirement, they will now need to verify that their new recruits meet the required conditions before entrusting them with mandates.

Employees already in post before the decree comes into force will not be affected by this requirement and will be able to continue working without additional training. However, some experts believe that this regulation could eventually be accompanied by strengthened checks on the skills and continuing professional development of professionals already in practice.

Towards Greater Professionalisation of the Sector

The property sector is one where the relationship of trust with clients is essential. This reform therefore forms part of a broader drive to strengthen the professionalisation of the industry and to combat certain lax practices that damage the sector's image. Pending the official publication of the decree, property industry players remain attentive to the clarifications the government will provide regarding this training requirement. The questions of funding, the choice of organisations authorised to deliver the training, and the implementation arrangements still need to be clarified. If properly implemented, this reform could represent a major turning point in the structuring of the property market in France, guaranteeing both greater competence and better consumer protection.

7. In Conclusion

February 2025 marks a key period for the property market, with notable developments on several fronts. Interest rates are stabilising, but access to credit remains demanding, still holding back a clear recovery in transactions. New tax and regulatory measures are reshaping the strategies of buyers, sellers and investors, while the new-build housing crisis continues to weigh on supply, with no immediate solutions in sight.

The announcement of the training requirement for estate agency employees signals a drive to further professionalise the sector. This reform could strengthen client confidence in professionals, but it also imposes new constraints on agencies.

In this changing landscape, the coming months will be decisive in confirming a gradual recovery or merely a pause in the market correction. Between adaptation and opportunities, every player in the sector will need to adjust their strategy to take advantage of these developments.