As property prices fell, French wealth fell last year for the second year in a row a study of INSEE and the Banque de France published on Wednesday 11 December. At the end of 2023, French household wealth amounted to 14,567 billion euros, or 0.9% less than at the end of 2022. Already in 2022 it had decreased slightly (-0.1%), after eight years of growth uninterrupted.
The contraction in wealth is mainly due to the decline in real estate prices: the value of properties owned by families decreased by 4.7%. This significant decline was partly offset by the increase in their net financial assets by 8.3%, driven by the increase in key rates by the European Central Bank in 2023 which increased the value of their financial assets. It is this increase in key rates that has increased the cost of real estate loans and caused a decline in demand and therefore real estate prices starting in 2022.
In 2023, corporate wealth fell much more than household wealth, losing 10% of its value in a year for non-financial companies. Responsible for this are on the one hand the decline in land prices and on the other the increase in the financial debts of these companies. The assets of public administrations decreased even more significantly (-27.5%), for identical reasons. The latter, however, remains above the 2021 level, because it had increased significantly in 2022.
Adding all these activities together, overall national wealth declined in 2023 (-4.2%), the first time since 2014. Real estate prices continued to decline during the first two quarters of 2024 and began to stabilize in the third, second the reference Notaries-Insee index published at the end of November.
The decision taken at the beginning of June by the European Central Bank to start reducing rates after the sharp slowdown in inflation was considered an initial factor in the market recovery. But buyers remain waiting, and the number of transactions continued to decline in the third quarter.