The new home market slowed down again, in the first quarter of 2023, when there are not enough properties available in the territory to properly house all the inhabitants. Professionals in the sector fear a lasting crisis and a socio-economic bomb.
The construction of new homes is declining month by month, a symptom of a crisis in the real estate sector. Professionals and associations are worried, even speaking of a situation unprecedented for half a century. The government took up the subject in November 2022, with the launch of the National Refoundation Council dedicated to housing, but the announcements are slow. Initially scheduled for May 9, the return of the proposals has been postponed for a month.
In an open letter to Emmanuel Macron, organizations in the real estate sector are getting impatient and calling for an “electroshock”. Contacted by franceinfo, the general delegate of the Federation of real estate developers (FPI), Didier Bellier-Ganière, speaks of a triple consequence if effective measures are not taken quickly: “There are three crises that will result from the housing crisis, a social crisis, an economic crisis and a societal crisis.” According to him, it is urgent to relaunch the production of new housing. Franceinfo has immersed itself in building permit authorizations and construction starts for new housing in the Data and Statistical Studies Service (Sdes), and takes stock of the slowdown in activity.
A well-established slowdown
The creation of new housing is at the heart of current concerns. Rental needs are glaring and demand is not declining. “We have a real supply crisis over the past 18 months”, summarizes Olivier Durix, general manager of offers and customers at Bouygues Immobilier. In March 2023, the number of housing starts remained low, continuing the slowdown in activity in new real estate.
In total, 359,200 new housing projects have been started over the last twelve months. A drop of 8% compared to the year 2021-2022, still well below the record level of housing starts at the end of 2017.
And the crisis is likely to escalate: the accelerating effects of 2022 (including the anticipation by the promoters of the new environmental regulations RE2020) are gradually fading and building permit authorizations remain below the average pre-crisis level sanitary.
This trend, if it persists, poses several problems: a rise in real estate prices, an impact on the production of social housing, congestion in the rental system and the inability to meet the housing needs of the French. Jobs in the construction sector are also at risk. In a report published in April 2022, the French Building Federation is alarmed by this situation. With a “business growth scenario at the same pace as in recent years, (…) pNearly 100,000 jobs would be destroyed in the sector by 2024-2025″, we read.
Mayors who issue fewer permits
But where does this collapse come from? The REIT points to rising construction costs, tougher regulations and rising interest rates. Professionals in the sector also deplore building permits that are difficult to obtain or take too long. Since the last municipal elections, mayors have issued far fewer. “On average, during previous municipal mandates, 19,300 collective dwellings were authorized every month, compared to 17,500 since March 2020. It is almost 2,000 dwellings per month that have evaporated in terms of authorizations”, observes Didier Bellier-Ganière.
Promoters and builders also speak of a social and societal brake on housing starts. Olivier Durix evokes “a global crisis of the act of building”. Residents no longer want to hear jackhammers, see cranes, or breathe dust at their doorsteps. Administrative appeals and petitions have multiplied in recent years. A rejection of construction “relayed by elected officials”, emphasizes the senior manager at Bouygues Immobilier. More town councilors are positioning themselves against the creation of housing. An example: the town hall of Illkirch-Graffenstaden, in the Bas-Rhin, congratulated itself, in its municipal magazine last November, on having put a brake on the “concreting”allowing only “two building permits for collective housing comprising more than five dwellings since July 2020”.
A still strong demand
However, if the number of new dwellings decreases, the demand does not decrease. According to a study published by the Observatory of new real estate of the REIT, 449,298 homes must come out of the ground each year to meet the needs.
Living apart – more and more French people live alone – is the first source of need. Then come the demographic increase, vacant or unrenovated housing which widens the shortages and unsatisfied demand that is carried over from year to year. Since the construction peak of 2017, which came close to the target of 450,000 new housing units, the trend has been downward and France is sinking into a lasting crisis.
Reconciling the French with the act of building and relaunching the production of housing are two objectives at the heart of the reflections of the National Council for Refoundation (CNR) dedicated to housing. Received by the Prime Minister on May 24, its co-hosts, Véronique Bédague, CEO of Nexity, and Christophe Robert, General Delegate of the Abbé Pierre Foundation, presented their conclusions and defended their proposals. No announcement has yet been made. The next big step is scheduled for June 5, the date of the return of the CNR.
Impatient and worried about the scale of the crisis, professionals in the sector are calling for strong political action and effective measures. Housing – the number one item of expenditure for the French – has an impact on employment, social integration and the environment. “It is a certainty, if nothing is done collectively, we are heading towards an economic, social and societal bomb.” summarizes Olivier Durix.