Determinants of house prices in France: Demographics, Planning and Monetarization

This article analyzes the dynamics of real estate prices in French départements over 25 years. It is based on considerations relating to the life cycle (and in particular the intensity of local ageing), planning policies (spatial concentration of the population, active population, metropolization, peripheralization) and monetary policies (creation of liquidity and the ability of real estate assets to capture excess liquidity). Using panel-data analysis, it studies both real and gross property prices, and prices normalized by M2 monetary aggregates, as a function of: total population change (natural rate, migratory rate), degree of ageing, interest rates, median income, divorce rate and new construction intensity. It then aims to characterize the departments most likely to see their share of total French housing capital outperform or underperform the average trend. The analysis is also split into 3 sub-periods: [2000; 2007], [2008;2015], [2015;2024]; the year 2007 indicating the start of the ageing boom in France, the year 2015 indicating the start of the structural increase in the number of deaths (with retirees owning on average 75% of their homes, compared with 58% for the national average). A projection based on demographic trends is also presented, along with a few comments on the effects of building restrictions (coastal law, mountain law, regional nature park law) in order to understand the effect that zero-artificialization laws could have on housing prices.