Are French home prices really falling?

The index of existing-home prices in France, computed by the Notaires and the Institut national de la statistique et des études économiques (INSEE), peaked in 2022 at 132.4 (2015 = 100). It stands at 126.9 in 2025: −4.2% since the peak, after a trough at 126.2 in 2024 and a slight recovery (+0.6%) over the last year.

“Prices are falling” is therefore true in current euros, but the 2023-2024 fall is modest, and the 2025 recovery did not carry on into 2026. The useful question lies elsewhere: by how much have prices fallen once inflation is removed, does the correction affect flats and houses the same way, and what does the mortgage rate say about what comes next?

In current euros, flats lost −4.2% between 2022 and 2025 and houses −4.1%: an almost identical correction for both segments. In 2025 both rebound — +1.0% for flats, +0.4% for houses. The European house price index, which covers new and existing dwellings, gives the same reading: −3.5% between 2022 and 2025.

Once consumer prices are removed, the correction changes scale. Between 2022 and 2025, the consumer price index rose by +8.0%: a dwelling whose price stayed flat therefore lost real value. Relative to prices, existing homes are worth −11.2% less than in 2022 — a France ÉcoScan calculation, dividing the housing index by the price index.

This correction follows a rise of unmatched magnitude: from 41.5 in 1996 to 132.4 in 2022, or +218.9% in current euros, while consumer prices rose by only +45.9%. Once inflation is removed, existing homes gained +118.5% in twenty-six years.

What has changed is the cost of money. The average rate on new mortgage loans to households, published by the European Central Bank (ECB) from the reports of French banks, was 1.15% in 2021, its historical low. It rose to 1.47% in 2022, 3.01% in 2023 and 3.39% in 2024 — 2.24 points of percentage in three years — before easing to 3.02% in 2025.

The chronology is clear: prices stopped rising in 2023, the year the rate doubled, and started rising again in 2025, the year it came down. Credit is not the only factor, but it is the one that moved fastest.

A home is almost always bought on credit: for a given monthly payment, the amount one can borrow depends directly on the rate. When the rate goes from one to three per cent, the same monthly payment finances a markedly smaller capital — the order of magnitude, and what it means for a household depending on the era, are computed in the full study, not here. This constraint passes through to prices with a lag: sellers adjust slowly, volumes fall first.

Previous episodes confirm this mechanism without fixing it. In 2008-2009, prices had fallen by −7.1% in one year with the financial crisis, while rates were falling. Between 2011 and 2015 they had lost −6.2% in four years, with rates declining. The 2023-2024 correction is the first that coincides with a rapid rise in rates.

The cycle reads in four movements. The rise from 1998 to 2008, driven by rates falling from 5.84% in 2000 to below four per cent and by longer loan terms. The 2008-2009 correction. The recovery and plateau from 2010 to 2015. And the second surge from 2016 to 2022, when the mortgage rate falls below two per cent, then below one and a half.

The 2022-2023 turnaround stems from the ECB's policy-rate increases against inflation, passed through to mortgage lending within months — the fastest mechanism in the whole series.

In 2025, the last closed year, the existing-home index stood at 126.9, up +0.6% over a year, with an average mortgage rate of 3.02% and inflation of 0.9%; once inflation is removed, it remained −11.2% below its 2022 level. That recovery did not last: in the second quarter of 2026, prices fall again, by −1.0% over the quarter and −0.8% over a year (INSEE, seasonally adjusted, provisional), while the rate on new mortgage loans is rising, from 2.99% in December 2025 to 3.18% in July 2026.