House Construction in France Slumps
Thursday 06 June 2013
Housing construction in France this year is likely to drop 18% from 2012 to 250,000.
That is just half of the 500,000 the government says are needed annually and the lowest since WW2, says Jean Perrin, President of the Union Nationale de la Propriété Immobilière, the private landlords association.
He said 304,234 new French homes were built in 2012, down nearly 20% from 2011. For 2013, "the figure will be the lowest since the Second World War," he told the AFP news agency in an interview.
The downturn is mainly due to the fiscal situation which discourages owner occupation, he said. "The problem is not that developers are unable to build but that they are not selling. The real challenge is not to find suitable construction sites but to give homebuyers the confidence to purchase. "
Last month the French developers' association, the Fédération des Promoteurs Immobiliers (FPI) announced that the number of new houses sold continued to fall in the first quarter, and was 6.9% below 1Q12 at just under 16,000 units nationwide. The time taken between land acquisition and sale had rose to 15.3 months against 12.7 months a year earlier. Perrin said that , from this point of view, the measures announced by the government of Francois Hollande to boost housing construction are unlikely to achieve their objective of boosting home building.
Paris-based think-tank Observatoire français des conjonctures économiques (OFCE) said earlier this month that the government's new buy-to-let housing incentive, named after Housing Minister Cécile Duflot, offers good returns for investors but is not meeting its social policy objectives despite its high cost.
The new incentive scheme offers a bigger tax break but is accompanied by tighter conditions, targeting areas where housing is in short supply and tenants on limited incomes. Buyers of new properties can offset 18% of the acquisition cost against their income tax bill over nine years, but only if the property is let to those on modest incomes at rents 20% below market levels.
The former Scellier scheme allowed buyers to offset 13% of the purchase price against tax, but without the same tenant income, rental and geographical conditions.
Source:Property Investor Europe
This article was featured in our Newsletter dated 06/06/2013