French Construction Costs Turned Positive in the Second Quarter After a Year of Falling

France's construction cost index rose 0.81% over the year in the second quarter of 2026, after falling 2.89% in the first. Asking prices stayed flat at 0.1%.

France's construction cost index stood at 2,103 in the second quarter of 2026, up 0.91% on the first quarter and up 0.81% on the same quarter a year earlier, the national statistics institute reported on 23 September in the release numbered 229. The annual figure is the one that changes the picture: three months earlier the same index was 2.89% below its year-ago level. In a single quarter the measure has crossed from contraction into growth.

The turn, quarter by quarter

The index closed the first quarter of 2026 at 2,084, a level 2.89% below the first quarter of 2025 even though it had risen 1.26% over the preceding three months. The second quarter added another 0.91%, and that second consecutive quarterly gain was enough to drag the twelve-month comparison above zero for the first time in the current cycle. The swing between the two annual readings is 3.7 percentage points, achieved without either quarterly move exceeding 1.3%: the annual rate moved because the weak quarters of 2025 dropped out of the comparison, not because costs suddenly accelerated.

The reference point is seventy years old

The index carries a reference value of 100 set at the fourth quarter of 1953, which is why a reading is quoted in the low thousands rather than near 100. A base that has not been reset since the post-war reconstruction makes the headline level almost meaningless on its own: a figure of 2,103 says only that measured building costs now stand at about twenty-one times their 1953 benchmark in nominal terms. Only the rate of change carries usable information, and the rate of change has just reversed sign.

A squeeze that lands on the developer

Set the cost figure against what French homes are actually fetching and the problem becomes visible. The national average asking price is about 3,642 dollars per square metre, a level 0.1% higher than twelve months ago. Costs are now rising at 0.81% a year while the price a finished home can command is flat. That gap does not close by itself, and it lands on whoever is midway through a project rather than on the buyer of an existing one.

What the existing market returns

Asking rents across France average roughly 16.23 dollars per square metre a month, which against that price level gives a gross rental yield of 5.35%, or 3.88% after the standardised 27.5% effective tax on non-resident rental income. That gross figure is comfortably ahead of Germany's 4.07% and Austria's 3.07%. The capital record is the mirror image: French prices are up 25.4% over ten years and 2.0% over five, well behind Germany's 42.7% and Austria's 61.2% over the same ten-year span. On a valuation basis France scores 39 out of 100, where a higher number means a more stretched market. Transaction costs run to about 9.1% of the purchase price.

Sources: Institut national de la statistique et des etudes economiques (INSEE), Indice du cout de la construction, deuxieme trimestre 2026, Informations Rapides no. 229, 23 September 2026 https://www.insee.fr/fr/statistiques/9053527; INSEE, Indices de couts et de prix dans la construction, release listing https://www.insee.fr/fr/statistiques/2015347

Market data: France