French real estate developers are continuing to face a challenging market, with housing reservations dropping sharply in the second quarter of 2025. Compared to the same period in 2024, new housing reservations fell by 23.6%, with 19,356 collective housing units reserved between April 1 and June 30, down from 25,333 in the previous year. This decline follows a previous low of over 42,000 reservations in the second quarter of 2021. Pascal Boulanger, a representative of French developers, said the market has not yet reached its lowest point, while Didier Bellier-Ganière, director of the Federation of Real Estate Developers (FPI), noted that current reservation levels are the lowest ever recorded, even lower than during the pandemic in 2020. Sales of housing units to social landlords have also slowed significantly, with a 40.8% drop compared to the second quarter of 2024. Only 5,162 units were reserved in Q2 2025, compared to 8,726 the year before. The decline is most noticeable in intermediate rental housing (LLI), which is designed for middle-class households. Bellier-Ganière explained that this is partly due to growing resistance from mayors and limited financial support for social landlords. As a result, these organizations are shifting their focus to social housing and renovation projects, where funding is more available. Private investors, who are vital to the housing market because they often reserve units before construction begins, have largely withdrawn from the market. The Jeanbrun tax scheme, introduced in the 2026 finance law, was intended to encourage investment by offering tax benefits and rental deductions for new owners of rental housing. However, the scheme has not been effective, with only 150 to 200 monthly reservations under it, far below the government’s target of 4,000. The scheme mainly benefits high-income individuals who already own property, limiting its impact on broader market participation. Vincent Jeanbrun, the Minister of Housing, admitted that the tax scheme is not well-designed and is working to improve it through a housing bill set for second reading in the National Assembly in October. Negotiations with political groups are ongoing to enhance the scheme’s appeal. However, new construction is expected to remain stagnant until at least mid-2027, due to ongoing economic difficulties, including the war in the Middle East, rising state borrowing costs (currently at 4.25%), and increasing mortgage interest rates, which could reach an average of 4% by the end of the year. These factors are likely to keep the housing market under pressure for the foreseeable future.