The French real estate market is experiencing a notable decline in investment activity, particularly from individual investors, reports the French press. This downturn, which began in 2022, is now weighing heavily on the rental market, raising concerns over future housing availability.
Prominent real estate agencies such as Foncia and Century 21 are sounding the alarm over the withdrawal of individual property investors. Foncia reports a 25% drop in investor activity in 2024 compared to the previous year. Century 21 statistics reveal a decline in sales to investors from 30.6% in 2022 to 25.5% in 2024 across France.
This contraction translates to fewer rental properties entering the market. The number of rental homes added to the market fell from 367,200 in 2022 to just 198,900 in 2024—a staggering 46% decrease.
A combination of policy changes, rising costs, and regulatory burdens is driving this retreat:
The retreat of private landlords is exacerbating a rental market already under pressure, reports Le Figaro. Century 21 has warned that the shrinking pool of private rental properties is “drying up the market” in areas where demand is already intense.” It is exactly the same story in Spain.
The situation is worsened by a parallel slowdown in new-build construction aimed at the rental market, largely due to the Pinel scheme’s wind-down (the scheme offered tax reductions for purchasing new properties in high-demand areas for rental purposes). Additionally, some landlords, faced with steep renovation costs, are opting to sell up or leave properties vacant rather than bring them up to regulatory standards.
Property industry leaders are calling for the government to rethink its approach to landlord taxation and regulation. Proposals include introducing a new tax status to reward and incentivise small-scale landlords who invest in the rental market. Such measures, they argue, could help stabilise the market and encourage much-needed private investment.
France’s residential property sector is facing a critical challenge. The combination of dwindling tax breaks, tough environmental standards, rising costs, and policy confusion is driving individual investors away from the rental market. This is squeezing the supply of rental homes, pushing up rents and limiting options for tenants. Without a course correction, the French rental crisis is likely to deepen into one more like Spain’s.
