Let’see the path we travelled through last year – 2024 – to see where we are now.

Notaire’s de France reported that, nationally, prices grew on average by 4.2% year-on-year and that where foreign buyers were prominent, such as the South of France prices rose by 6% and, nationally, high value properties rose by 8%. Normandy house prices did not reach those dizzy heights, but, since 2021 average costs per m² for houses have risen from €1,700/m² to €2,051/m² in mid-2024 – a jump of 30% plus!

Most real estate pundits ascribe this growth to location amenities, transport links, jobs growth and consistent interest from overseas buyers, especially the UK. But will it last?

THE PROPERTY PRICE OUTLOOK FOR NORMANDY IN 2025

 So, what’s the outlook for Normandy? These are my best guesses. Property prices per metre² are likely to remain stable at the current level in this area of Calvados. The median selling price/m² was €2,230[1]  at the close of 2023 for houses in Calvados. It’s now a little lower – at least for a while. (The table above shows the properstar.co.uk data for December 2024). Why might they remain stable?

First, the drop in prices has probably reached its floor. It was the result of a lack of availability of mortgages, not a fall in demand. Here is how it happened. At the beginning of 2022, the Government introduced a new law in France which restricted new mortgage loans to a maximum of 25 years (previously you could obtain a loan over 35 years) and capped the amount that could be borrowed (including for fees and insurance) to 35% of the borrower’s income. This is called “taux d’usure” and is calculated before tax and takes into account all other mortgages, loans and credit cards. The objective of the new law was to reduce consumer debt. It failed to hit its target. The situation was made worse by rises in interest rates to combat inflation driven by the post-COVID impact and the Ukraine War.

The outcome of this policy blunder was to undermine the funding for the housing market and trigger a fall in housing transactions from 1.2MN down to 1.0MN. That is my understanding of why prices fell in general.

Second, the main house price rises are in regions where foreign buyers have been active, as mentioned above. Normandy is one of those areas. Foreign buyers had the advantage of being cash buyers and were able to negotiate favourable prices. This may continue to be the case in 2025.

Third, underpinning this situation is the outlook for 2025, which I characterise as ‘Stagflation’. As I wrote last year, as long as interest rates across the Eurozone remain high, property transaction levels will be depressed along with property prices because people, especially younger people, have trouble getting credit. One estimate is that mortgage lending fell around 30% across the EU in 2023[2]. So,2024, represented the low level. My expectation is that prices will remain at this level until interest rates fall.

2025 is probably a very good time to buy, but it won’t last forever. I still expect that property prices in Normandy are likely to rise in the longer term. Properties in most areas are good value for money. France as a whole has seen has seen prices rise 126% since 1966[3]. The UK has risen 145% over the same period. But value-driven property prices alone are not a sufficient inducement to encourage more people into an area. If they were, people would be flocking to Romania and Bulgaria. The possibility of well-paid jobs, good public services and schools are also essential ingredients which Normandy offers.

[1] https://immobilier.statistiques.notaires.fr/prix-immobilier?typeLocalisation=DEPARTEMENT&codeInsee=14&typeBien=MAI&neuf=false

[2] https://www.fortierfinance.com/finance-outlook-france/european-interest-rates-outlook-2024/

[3] https://www.euronews.com/2023/03/07/europes-hottest-property-markets-where-have-house-prices-risen-the-most