It is a mistake to treat real estate as a safe haven, says Hervé Boulhol, the Organization for Economic Cooperation and Development's France economist, as such an underestimation of risk can, in turn, inflate a bubble. Until the end of 2009, the OECD had been able to explain price movements in the French market with fundamental factors, but in 2010 their usual econometric calculations based on factors such as cohabitation rates, credit conditions and household incomes failed to explain what was going on.
"This may signal a bubble phenomenon, as a bubble is a disconnection with fundamentals," Mr. Boulhol says.
Prices this year may already be moving out of reach of buyers, causing demand to fall, says Mr. Eluere of Crédit Agricole. And the worsening economic outlook and concerns about tougher taxes are further a disincentive to buy.
In some areas, the turnaround is already becoming evident. Notaries registered a clear fall in sales this summer, which hails "a much less certain real-estate cycle in coming months," Notaires de France wrote in a note published early this month.