Real estate: in France, new housing construction is at an all-time low

With regard to new housing, the sudden rise in raw materials and the rise in interest rates are worrying developers.

It becomes difficult to build new housing in France in crisis. We have catastrophic numbers.says Pascal Boulanger, president of the Federation of Real Estate Developers (FPI), with figaro. Rising raw material costs and rising interest rates are worrying developers who are struggling to get building permits.

“Something dazzling crumbles upon us, Norbert Fanchon, chairman of Gambetta, announced the developer that builds 1,200 homes a year. Everything happens at the same time: the cost of money is multiplied by 2, prices are rising by 15%, there is a shortage of manpower. We are in an emergency situation that we are not prepared for. » For manufacturers, difficulties also exist. “Between November 2021, the beginning of the energy crisis, and April 2022, prices for building steel and semi-finished aluminum products increased by 27%, prices for roof tiles by 20% and PVC products by 16%,” says Olivier Saleron, president of the French Federation of Building (FFB).

There are sites that have stopped due to difficulties in supplying or difficulty in reaching an agreement with school principalswe explain to FFB. Less than 5% of job sites are involved. » This is several hundred cases. “It’s a constant confrontation with suppliers”, says Hervé Legros, president of the promotion company Alila (733 million euros in turnover in 2021). The sector is weak.

Today is the great uncertainty »

New construction sites pose some problems. “We moved from fixed prices to revisable prices, Eric Groven, president of Sogeprom, a subsidiary of Société Générale explains. For five to ten years, we didn’t have hypertrophy. We agreed with the companies and it was agreed. Today is the great uncertainty. » Strategies differ for different actors. “We are choosing to continue to start operations, even if it means sacrificing cash flow, Norbert Fanchon intervenes. If inflation drops again in six months, I’ll have made the right bet; If prices continue to rise, I will be making the wrong choice. »

The current context does not favor the promoters’ commercial offer, which continues to decline. It decreased by about 12% over a year and by about 30% compared to 2019 with less than 77,000 housing units at the end of March 2022. The rise in rates is not suitable for buyers. In recent months, credit conditions have been tightened. Borrowers can no longer borrow for more than 25 years and monthly installments exceed 35% of income.

From the investor side, the new restrictions limit budgets. Sales of Pinel, which offers a tax advantage to the buyer, fell 23% in the first quarter, according to REIT. While the demand remains, especially for smaller apartments, real estate is scarce. “When we have such a product, we immediately have two or three options to buy on it, but that price range is not in the market anymore,” Remembers Nicholas Billet, of UFF Management. In addition, the offer should become more rare in the coming months.

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