After two difficult years, the French real estate market had rebounded in 2025, with nearly 952,000 transactions recorded. This figure had restored confidence among industry professionals. However, this upturn could be short-lived. The National Federation of Real Estate (FNAIM) anticipates a decline in sales in 2026, with transaction volume expected to be between 900,000 and 920,000. Rising interest rates, a tense geopolitical climate, and the increasing vulnerability of low-income households: several factors are combining to darken the outlook. Here's an overview of a market searching for its second wind.
An economic environment that weighs on confidence
From global turbulence to local repercussions
The real estate market is not operating in a vacuum. Geopolitical tensions—particularly in the Middle East—and global economic uncertainties have eroded the confidence of households and investors. Added to this is a resurgence in inflation: rising from 0.3% to 2.4%, it is eating away at purchasing power and complicating financial decisions. Loïc Cantin, president of the FNAIM (National Federation of Real Estate Agents), emphasizes this climate of widespread caution, which is hindering purchasing decisions, even among households that were initially well-positioned.
Rising interest rates: a subtle but persistent obstacle
Another worrying sign is the gradual rise in interest rates. Between June 2025 and the end of the year, rates increased from 3.05% to 3.25%, driven by a tightening of monetary policy by the European Central Bank. While far from the dramatic surge seen in 2023, this increase remains moderate—but it is enough to significantly reduce household borrowing capacity. For a 20-year loan, a few tenths of a percentage point higher translates to several thousand euros more in total cost. A real obstacle, especially for first-time buyers.
Home ownership made more precarious for those with modest incomes
A "pauperization" that worries the Fnaim
This is one of the most alarming signs raised by the FNAIM (National Federation of Real Estate Agents): the progressive impoverishment of homeownership. Households with the lowest incomes—those earning less than €50,000 annually—are finding it increasingly difficult to secure bank financing. The share of loans granted to this category has shrunk, falling from 29% in 2021 to just 23% in 2025. In four years, nearly one in ten borrowers in this income bracket has disappeared from banks' databases. This trend raises serious questions about fairness in access to housing.
Borrowing strategies under pressure
Faced with these constraints, buyers are adapting—not without sacrifices. The average loan term has climbed to 22.6 years, with more than half of loans taken out at the maximum permitted term of 25 years. Borrowing for a longer period reduces monthly payments but mechanically increases the total cost of credit. At the same time, the average down payment is now approaching 20%, a threshold that is increasingly difficult to reach for households without prior capital. These adjustments reflect a market where the burden of homeownership continues to grow.
Rental investment is losing momentum
A segment that is shrinking year after year
Long a driving force in the market, rental investment is going through a difficult period. It now represents only 12% of real estate transactions—a historically low level. The combination of less attractive borrowing rates and increasingly restrictive rental regulations (energy standards, rent control, mandatory maintenance) is deterring a growing number of individual investors. Loïc Cantin does not rule out that 2026 will be even more challenging for this segment than 2025 was.
A domino effect across the entire market
The decline in rental investment isn't just a sector-specific statistic. Fewer active investors also mean fewer renovations, fewer refurbished properties returning to the market, and ultimately, a deterioration of the private rental stock. In high-demand areas where demand remains strong, this decline exacerbates the shortage of available housing and puts upward pressure on rents. It's a vicious cycle that disproportionately affects tenants with limited resources.
What are the prospects for 2026 and beyond?
An anticipated but controlled retreat
The FNAIM (National Federation of Real Estate Agents) forecasts a decline of approximately 5% in transaction volume in 2026, with sales settling between 900,000 and 920,000. This is a significant drop, but still far from the historic lows experienced during major real estate crises. If current economic conditions stabilize—with inflation under control and interest rates remaining stable—the market could mitigate the damage and prepare for a stronger rebound in the medium term.
Reasons to believe it nonetheless
The picture isn't entirely bleak. Banks, aware of the slowdown in lending, are seeking to remain competitive on their financing terms. Policy adjustments—such as expanding zero-interest loans, providing tax incentives for renovations, and supporting investment in intermediate rental properties—could also help to revive the market. Furthermore, the housing market has demonstrated a remarkable capacity in the past to regulate itself and rebound after periods of contraction.
Price, supply, demand: where do we really stand?
Prices that are holding up, but for how long?
Despite the slowdown in the number of transactions, real estate prices are not collapsing. In many major cities, land scarcity and population pressure are maintaining a certain firmness in values. However, some secondary or peripheral markets are beginning to show slight declines. The real question is how long this will last: if the volume of sales continues to fall and sellers struggle to find qualified buyers, a more pronounced price adjustment will become inevitable in less competitive areas.
A structural demand that does not disappear
It would be wrong, however, to conclude that there is a lack of interest in real estate. The desire for homeownership remains deeply rooted in the life plans of a large majority of French people. The current obstacles are primarily financial and cyclical, not structural. As soon as financing conditions ease—even modestly—some of the pent-up demand should quickly materialize in the market. The current caution is not disengagement: it is waiting.
The French real estate market enters 2026 with more questions than certainties. The recovery of 2025, while real, was not enough to erase the sector's structural vulnerabilities: difficult access to credit for low-income households, struggling rental investment, and an uncertain economic environment. Yet, demand remains, latent, ready to awaken as soon as conditions allow. For those considering buying or investing, paying close attention to interest rate fluctuations and carefully planning your project will be crucial. You can start searching now for a property suited to your needs or post an advertisement to reach a qualified audience.
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