The real estate market in 2024 has gone through a correction phase after two years of price and sales volume tensions. Transactions have declined, credit rates have weighed on households’ purchasing power, and new tax rules have changed the strategy of many investors. Understanding these real estate trends allows for a better reading of the current market and anticipation of the months to come.
Taxation of LMNP in 2024: what changes at the resale of a furnished property
Have you heard of the LMNP status (non-professional furnished rental)? This regime allowed investors to deduct depreciation on their property, thus reducing taxes during the rental phase. The mechanism was simple: each year, part of the property’s value was “erased” from an accounting perspective.
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The problem arises at resale. Until recently, these depreciations were not taken into account in the calculation of capital gains. An investor could therefore depreciate for ten years and then sell without it increasing their tax bill.
The finance law for 2025 (known as the “Le Meur law”) has modified this rule through Article 84, which affects Article 150 VB III of the General Tax Code. For any transfer occurring since February 15, 2025, real estate depreciations are reintegrated into the taxable base of the capital gain. In practical terms, a heavily depreciated property will see its taxable capital gain increase significantly upon resale. Only furniture remains excluded from this reintegration.
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For investors following real estate news on Novalis, this reform changes the game regarding the overall profitability calculation of a furnished rental investment. A purchase in actual LMNP must now incorporate exit taxation from the outset.
Transactions and real estate prices in France: a market in correction
The volume of sales of existing homes declined in 2024, extending the downward trend that began the previous year. This decline can be explained by rising credit rates and a general wait-and-see attitude from both buyers and sellers.
Why prices have fallen, but not everywhere
The price drop has not been uniform. Major metropolitan areas where prices had risen sharply have experienced the most visible corrections. In rural or suburban areas, demand has remained more stable thanks to remote work, which has limited the decline.
This geographical disparity is a point to watch. A purchase in 2024 in a medium-sized city does not carry the same risk as a purchase in a Parisian market undergoing correction.
Interest rates and mortgage credit: the main barrier to buying
Interest rates have nearly quadrupled in eighteen months between 2022 and the end of 2023. This rapid increase has had two concrete effects:
- The real estate purchasing power of households has decreased: for the same income, borrowing capacity has diminished by several tens of thousands of euros.
- Granting criteria have tightened. The maximum debt-to-income ratio remains set at 35% of income, and the loan duration is capped at 25 years (27 years for new builds with a deferral).
- First-time buyers, often without significant down payments, have been the most penalized by these new financing conditions.
At the end of 2024, a slight easing of rates was observed, but the cost of credit remains significantly higher than it was in 2021. This situation modifies the buying strategy: negotiating the property’s price becomes more profitable than seeking the best rate, as negotiation margins have widened.
What this means for a real estate purchase project
With sellers more willing to lower their prices and transaction volumes at their lowest, buyers with solid down payments find themselves in a favorable negotiating position. The market has shifted from a seller’s market to a buyer’s market in many cities.
Energy performance and DPE: an increasingly stringent filter
Since January 2023, homes classified G+ in the energy performance diagnosis (DPE) can no longer be offered for rent. This ban is gradually extending to other thermal sieves. Are you looking for a rental property? The DPE is no longer just an administrative document; it is a criterion that determines the very possibility of renting.
A property classified F or G loses rental and asset value if it is not renovated. Buyers are now incorporating the cost of energy renovation into their purchase offers, which increases the depreciation of these properties on the market.
For landlord owners, the constraints are twofold:
- Bringing the property up to standard to continue renting, which represents a sometimes heavy investment.
- Accepting a discount at sale if renovation is not carried out, as the buyer will have to finance it.
- Anticipating the regulatory timeline: properties classified E will be affected in turn in the coming years.
This regulatory pressure has contributed to increasing the supply of properties for sale in 2024, particularly in the old stock. Thermal sieves represent a growing share of transactions, often with significantly reduced prices.
Real estate market outlook: stabilization expected
Signals for the coming months point towards a stabilization of prices rather than a new sharp drop. The slight easing of credit rates, if confirmed, could bring some buyers back to the market.
The new build market remains under pressure, with high construction costs and environmental standards (RE2020) impacting exit prices. The old market, despite the depreciation related to the DPE, offers opportunities for buyers willing to undertake renovation work.
The real estate market in 2024 rewards patient and well-informed buyers. The correction of prices, the increase in supply, and the new tax rules create an environment where every purchase or rental investment decision deserves precise calculation, incorporating the cost of credit, exit taxation, and the energy performance of the property.