The French construction industry is facing severe challenges in 2024, with a projected 6.6% decline and potential job losses of up to 100,000 due to stagnation in new housing projects and high borrowing costs. Olivier Salleron of the FFB criticized the lack of a supportive finance bill, which could lead to a total of 150,000 job cuts by 2025. Additionally, there has been a significant drop in individual house sales and an increase in bankruptcies, prompting calls for immediate tax reforms.
Real Estate Sector Faces Significant Challenges in 2024
The French construction industry is grappling with severe setbacks, as highlighted by the French Federation of Building (FFB), which reported a substantial decline of 6.6% in 2024. Without supportive measures in place, recovery seems unlikely for the following year.
Currently, the FFB warns that the lack of a finance bill for 2025 could result in the loss of approximately 100,000 jobs in the construction sector next year, following an initial estimate of 30,000 job cuts this year.
A major factor contributing to this downturn is the stagnation in new construction projects, especially in housing. Over the past two years, rising costs and elevated borrowing rates have significantly impacted the purchasing power of the French populace.
Olivier Salleron, president of the FFB, expressed his disappointment during a press conference, stating, “We could have called this presentation ‘PLF for housing: another failure.’ All necessary elements were included in the finance law to motivate citizens to reinvest in real estate.” He emphasized the absurdity of leaving companies without clear direction.
Projected Declines in Employment and Construction Activity
Despite high employment levels in 2023, the FFB predicts a downturn in productivity and a drastic drop in jobs in 2025. Salleron anticipated a total loss of 150,000 construction jobs by 2025, potentially surpassing that figure in 2026.
The data reveals a striking 15.6% decline in new construction, with housing experiencing a staggering drop of 21.9%. This decline is only marginally offset by a 1.2% increase in improvement and maintenance activities for 2024.
In the realm of individual house sales, the activity has plummeted by 60 to 70%, with projections suggesting around 50,000 houses sold in 2024, according to Salleron.
The proposed 2025 budget, currently stalled due to political challenges, aimed to extend zero-interest loans, adjust state levies on social landlords, and provide credits for energy renovations, among other initiatives. Salleron noted that these measures could have promptly stimulated new construction starts.
Looking forward to 2025, the FFB predicts a further decline of 14.6% in new construction, with housing and non-residential projects expected to drop by 14.2% and 15% respectively. Meanwhile, improvement and maintenance work may see a modest increase of just 0.9%.
Call for Immediate Tax Reforms
The ongoing decline in activity has led to a rise in business failures within the sector, with 14,214 construction companies going bankrupt between September 2023 and October 2024—a staggering 28.4% increase from the previous year.
The sector’s hopes now hinge on proposals from key political figures, including Charles de Courson and Eric Coquerel, who have urged the new Prime Minister to implement urgent tax provisions that enjoy broad consensus. They emphasized the importance of swift action, especially given that the approval of the 2025 budget may take several months.
Among the proposed measures are the extension of expiring tax credits, tax and social exemptions for tips, indexing income tax rates to inflation, and continued support for farmers. The aim is to have these provisions debated as soon as the Assembly reconvenes on January 13.