This decline in sales of new homes is due to several things: the first is soaring prices for materials needed for construction. Because of the war in Ukraine, which has been going on for a year, but also because of China, which was still entangled in its health restrictions due to Covid, they took an average of nearly 25% increase. Everything has increased: steel, aluminum, wood… transport and logistics costs, also with the increase in fuels.
To this must be added the delays – however, in economics, as we know, time is money. Delivery times have quadrupled in two years: where it took a month to get windows, it now takes more than a quarter. Construction sites have often slowed down. And with much higher bills than before: the federation of builders did the math: last year, excluding the price of the land, it took nearly 200,000 euros to build a classic house, while two years more earlier it was 15% cheaper.
Result: a drop in sales of 30% and even almost 40% at the end of last year. Either a catastrophic year according to the Federation of Builders, which has not seen such a decline since the financial crisis of 2008, for 15 years. Promoters and professionals are reluctant to cut their margins too much. They are tempted to limit construction, or even to turn away from it, because there is also the rise in interest rates which comes into play. The small detached house is still a dream, but with rising rates and fewer household purchasing possibilities, the borrowing capacity of the French has melted, with loan refusals from banks.
What to expect for this year?
Professionals are not really betting on a recovery, because interest rates are still high. With inflation still high, buyers are struggling to get their plans off the ground. In fact, the real estate market is slowing down almost everywhere in France: there are fewer transactions and houses that have already been built are selling less well.