The French housing pressure
Each year, almost half a million new homes are needed in order to meet demand. However, most French developers are concerned about not being able to sell their projects because of the lack of loans granted by banks to individuals. Times are getting harder, and developers begin to feel it indirectly on their market.
In early May 2012, the French elections were an opportunity for them to explain their problems to current ministers. Developers, house builders, promoters, and other representatives of social housing – even the “Fondation Abbé Pierre”, a famous French charity which looks after homeless people – put on the table the whole subject of housing. Despite the fact that figures vary, professionals all agree that they should build at least 500,000 units per year to meet demand. But how could they do that without funding? The housing in France is still slow today. It even receded by virtually 20% between March and May, so experts expect builders will clearly not reach their purpose. In fact, they could only build up to 330,000 accommodations maximum. For your information, 400,000 accommodations were built last year. Demand is collapsing and 2012 will not be good.
According to departmental data reported in early July, only 72,000 sites have started between March and May 2012, which accounts for a 19.8% drop over the same period last year. Even if the decline is less dramatic, we have to quote that building permits decreased by 2.7%. Since the beginning of the year, the French housing market recorded only 102,690 units.
“The French commercial promoters represent 80,000 homes. For nearly 50,000 of them, the operation is not safe to carry. The bank will be able to fund any project only when half of the program will be marketed. Many operations may be abandoned”, said François Payelle, the new president of the French FEDPS, the Federation of Property Societies. Restart construction is a real challenge in early September.
In order to reverse the current trend, the French government is considering several solutions. For example, make available some of the lands that belong to the French State, reverse the tax incentive for homeowners to sell their properties quickly, launch a new tax incentive scheme in place of the Loi Scellier to bring individual investors to purchase temporary homes, and other solutions. Many options are being considered by the French government.
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