The City of Light’s luxury real estate market has dimmed in the new year.

Though a swath of ultrahigh-net-worth individuals caused demand for Paris’s luxe properties to soar in 2025, recent political struggles, budget issues, and a potential wealth tax in the city may affect the market, Bloomberg reported.

Barnes, a luxe agency that currently cornered over 25 percent of the Parisian high-end market, has seen a good amount of its wealthy customers (considered to be those worth at least $30 million) having the desire to leave France as of late and sell their properties as a result of those issues. That’s quite the change-up from 2025, when the French city saw its transactions increase by 22 percent to its highest benchmark in 20 years—and assets priced at more than one million euros (around $1.2 million) saw a similar increase, according to a report from the agency. The surge came after two years of struggles on the Parisian luxury home market: In 2023 and 2024, higher interest rates and videos of violent protests helped cause the market to shrink, according to Bloomberg.

The homeowners’ decision to part with their property hinges on what the French government will do next, Richard Tzipine, head of Barnes’s Paris division, told Bloomberg. Currently, no party in the French government has a majority, and the body has struggled to pass budgets since 2024, when President Emmanuel Macron held snap elections. The political instability looms large over the real estate market, leading to a bit of a squeeze toward the end of last year.

A looming wealth tax suggested by economics professor Gabriel Zucman that would create a 2 percent tax on those with fortunes above €100 million (about $117.5 million) isn’t making the city seem more desirable, either. (Bernard Arnault isn’t a fan, calling the proposal a “clearly stated desired to destroy the French economy” last fall. Other economists argue whether such a levy would raise $23.5 billion a year, or pull $5 billion a year as the wealthy exit the city.) If residents do decide to offload, many are set on heading to Italy, Switzerland, Luxembourg, or Israel.

Paris is still a prime locale for the ultra-wealthy to put down roots, but many other cities have trumped it due to their relaxed tax regulations. Milan, for one, as emerged as a top place for affluent folks, with many families flocking there in response to the U.K.’s removal of its non-dom system. Other popular spots include Dubai, Miami, and Marabella, with Madrid taking the crown for the most sought-after city for the uber-rich, according to Barnes’s 2025 data.

Don’t count the French capital out yet for 2026, though: The City of Light is rather popular with foreign buyers right now, especially American house hunters, Tzipine told Bloomberg, which may help give Paris’s 2026 outlook a boost.