Why new housing is sinking a little deeper into the crisis
Reservations fall 24.4% in third quarter, listings plunge 32.1%, REIT says
Quick Look
- Reservations for new homes fell 24.4% in the third quarter, reaching a fifty-year historic low according to the REIT.
- Sales plunged by 32.1% and the sector has lost more than 12,000 jobs since mid-2022, in a context of multifactorial crisis.
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Why It Matters
New construction has been going through a serious crisis since mid-2022. The causes include the international context, the lack of confidence of the French, the pre-electoral climate, inflation at +3.4% in October, the absence of an attractive tax system for purchasing, the discontinuation of Pinel, the replacement by Jeanbrun deemed ineffective, and the increase in borrowing rates.
The collapse of new real estate continues. Already at their lowest, reservations collapsed again by 24.4% in the third quarter year-on-year, falling to nearly 15,000, the Federation of Real Estate Developers (FPI) announced on Thursday. “These are the worst figures for at least fifty years,” alarms Pascal Boulanger, president of the FPI. The entire chain is affected. Due to lack of visibility, developers are freezing their construction sites: sales plunged by 32.1% in the third quarter, to 9,140 homes, a historic low. Nearly 28% of operations were withdrawn from marketing.
The reasons for the crisis are multiple
New construction has been mired in a serious crisis since mid-2022 which does not seem to be ending. The reasons are multiple. “The international context, the lack of confidence in the future with French people who do not have morale”, summarizes the boss of the FPI, also evoking the pre-electoral climate which maintains a wait-and-see attitude and inflation, which rose to + 3.4% over one year in October.
That's not all. The absence of a sufficiently attractive purchase tax system penalizes the entire sector. “Pinel, which for a long time represented half of sales, has stopped and Jeanbrun, which replaces it, is not working,” notes Pascal Boulanger. To make matters worse, rising borrowing rates make it more difficult for buyers to access credit. These difficulties have consequences on employment: the sector now only has 22,650 employees, compared to 35,000 people before the crisis.
Open Questions
- What are the precise details of the Jeanbrun device and why is it not working?
- What public measures are planned to revive new construction?
- How many promoters have ceased their activity since mid-2022?
