Experts in the field warn of a real disaster

During the Pôle Habitat FFB press conference on February 22, in which the Empruntis editorial team participated, Alarm bells have been rung about a new housing crisis. Describing the situation as a “catastrophe” or even a “tsunami” and predicting only 8 construction starts per 1,000 households in 2024, the same level as in the 1950s, the federation considers the situation dire. Building approvals are expected to decline for 2025 More than 12% Due to the decrease in sales compared to the previous year (-30%). In 2023, Only 123,000 new homes were sold to individuals, which represents a decrease of 38% compared to the previous year. That’s less than half of 2021 sales and well below the long-term average, which was 222,425 units sold from 2007 to 2023.

Lending rates reported as of 02/23/2024

New Habitat: 2023 Annus horribilis

General view

For two years, the new housing sector has faced a widespread crisis, with regions and housing types affected indiscriminately. Land prices are increasing due to the implementation of ZAN (Zero Net Artificialization), as a result Significant increase in the price of building land (+9.5% between 2019 and 2022). in parallel, Construction costs have increased since the beginning of 2021

, material prices are 30% to 40% higher than in 2019, and a significant increase in the average cost of building construction (+23.7% between 2020 and 2023). According to a survey conducted by Pôle Habitat FFB among representatives of market builders, the implementation of RE2020 has also generated additional costs. Construction costs increased by an average of 7.4% over this period.

Interest rates rise endlessly

Continuous increase in interest rates from January 2022, The average increased to 4.20% at the end of 2023 compared to 1.05% at the end of 2021., adding to the frustration of buyers, leading to an average loss of real estate purchasing power of around 57,500 euros between the beginning of 2022 and the end of 2023. Additionally, the number of real estate credit files rejected by lending institutions has increased, particularly due to the regulatory constraints of the HCSF (The High Financial Stability Council) and limitations imposed by interest rates. As a result, The origination of real estate loans to individuals fell 40.3% in new housing in 2023, with a 41.5% decline in the 12 months to the end of January 2024.

Downfall

Despite repeated warnings from Pôle Habitat FFB and FFB, The new housing market experienced a historic decline of 76,230 housing units in one year, due to lack of demand recovery measures. Sales of new homes to individuals fell to 123,000 units in 2023, less than half of 2021 sales and about half of the long-term average (222,425 units on average from 2007 to 2023).

Consequences on employment

A survey conducted by Pôle Habitat FFB (end of December 2023) among a representative sample of house builders, real estate developers and land developers confirms dramatic results for businesses and employment. Employment falls by 16% in 2023

With a further decline of 14% forecast by the end of the first half of 2024. Within two years, around 30% of jobs will be lost across the sector.

Construction of Individual Houses: Regional Heterogeneity

Sales of new single-family homes fell sharply in 2023 An overall decrease of 39.1%. Regions varied, with Brittany performing best with a 27% decline, while Hautes-de-France suffered a 56.8% fall. Other regions also saw their sales decline, notably Centre-Val de Loire (-45.8%), Auvergne-Rhône-Alpes (-45.1%), and Normandy (-44.5%).

Total sales in real estate development also declined significantly, reaches -23.5%Institutional investors are up 8.3% thanks to support plans from CDC Habitat and Action Logement. Individual sales fell 37.5%.

This has led to a trend Increase in new housing stock by an average of 14.5% annually in 2023The arrears settlement period reached 21.1 months during the year, compared to the long-term annual average of 10 months and 11.7 months in 2022. Construction of new housing also begins. 22 has decreased % in 2023Only 287,000 housing starts hit the historic lows of 1992 and 1993.

A difficult outlook for the French

Without immediate action, The housing crisis will continue for 83% of French people. Lack of affordable housing hampers professional mobility, with six out of ten companies facing recruitment difficulties. The Prime Minister’s comments on the importance of housing made on February 14 underlined, But concrete action is essential for Pôle Habitat FFB president Grégory Monod, who criticizes the lack of oversight. FFB’s forecasts are pessimistic, with housing starts per household falling to 8 in 2024, similar to the 1950s, with no prospect of recovery in 2025. A government strategy focused on supply, rather than urgent demand stimulation, is criticized.

Ways to revive demand

Pôle Habitat emphasizes the need to reiterate some of the proposals already put forward to simplify the FFB processes and encourage real estate investment. Among them:

• The immediate suspension of HCSF barriers is put forward to support French growth and avoid VAT losses estimated at around 50,000 euros per dwelling sold or not built;
• Restore the PTZ for new properties at 40% across the region, which could bring more than 750 million additional euros to the state treasury;
• Exemption from transfer tax on donations for construction or acquisition of new housing intended for principal residence;
• restoration of the Pinal system in its 2022 version;
• Adjustment of RE2020 and establishment of moratorium on REP building until operational solutions are put in place.