“The time is no longer for observations, procrastination or hesitation”. In an open letter published this Monday, May 15 by The Parisianthe main construction and real estate employers’ federations are calling on Emmanuel Macron to take the necessary measures to relaunch the production of new housing.
“An electric shock is essential: immediately applicable and powerful measures are necessary to prevent this crisis from worsening further”, ask the presidents of the main construction and real estate employers’ federations (FFB, Pôle Habitat, Fnaim, FPI , United, Procivis). “When will the State take the real measure of the risk of an economic, social and societal bomb that the crisis of the ‘power to live’ that our fellow citizens face?”, they wonder.
Postponement of the CNR’s conclusions, plummeting pace of new housing construction, mayors’ reluctance to issue building permits, difficulty in accessing mortgages… Four reasons explain this anger.
The postponement of the conclusions of the CNR
The players in the housing sector were impatiently awaiting the conclusions of the National Council for Refoundation (CNR). Some 200 people worked for five months on dozens of proposals as part of this Housing section of the CNR, which is supposed to respond to these issues. He was to deliver his conclusions on Tuesday, May 9. But the members of the CNR were warned a few days earlier of a postponement, officially linked to “an agenda constraint”, according to the Ministry of Housing. Finally, the restitution will take place on June 5th.
“It’s the most total misunderstanding. We worked for four months, we were good students. We know that we will not be heard”, declares to AFP, Loïc Cantin, president of the National Federation of the real estate (Fnaim). On the government side, on the other hand, it is estimated that the restitution of the proposals of the CNR Housing “will make it possible both to formulate immediate solutions” and “structural responses”, affirms the Minister Delegate for the City and Housing, Olivier Klein, in a statement sent to AFP.
Emmanuel Macron’s statements in a interview at Challenges put online on Wednesday May 10 also made several players jump. The head of state called for a “conference of parties” to respond to the housing crisis and castigated “a system of public overspending for collective inefficiency”. “We are now no longer expecting yet another consultation, but the expression of a clear and ambitious presidential will as well as quantified measures, a rapid implementation schedule and financial means adapted to the challenges”, respond the professional federations in this open letter.
New housing construction in freefall
The pace of new housing construction has plummeted in recent months, a victim of rising construction costs in the wake of the war in Ukraine. At the end of March 2023, the number of new housing permits issued in one year fell by 11.5%, to 441,400, according to data revealed on April 28 by the Ministry of Ecological Transition. This is a steady decline since the August 2022 record (525,300) due to regulatory deadlines. The number of construction sites started, which traditionally follows that of building permits, fell by 8.3% over one year, to 359,200. A total mainly pulled down by single-family homes.
As of March 9, the Federation of Real Estate Developers (FPI) sounded the alarm. According to her, sales to individuals fell by almost 40% in the last quarter of 2022. Year-on-year, sales to individual investors fell by 26% and sales to homeowners fell by 13.4%. Over the whole of 2022, new home reservations recorded by the REIT fell by 24.6%, even climbing to 36.3% in the fourth quarter.
“The trend is getting worse”, noted at the end of April with L’Express Pascal Boulanger. If the final figures will be revealed on May 25, the president of the FPI is already expecting a drastic drop in building permits in the first quarter of 2023: -30% compared to the first quarter of 2022. More and more developers prefer to postpone launching certain projects, or even abandoning them, judging them to be too unprofitable. “About 18% of real estate transactions are not made for economic reasons”, explains Pascal Boulanger.
The reluctance of mayors to issue building permits
Mayors, on the front line since they issue building permits, are particularly in the sights of players in the real estate world. “The mayors tell us that they no longer have any interest in building housing,” laments Pascal Boulanger. “You have mayors, placed at the head of large metropolises, who no longer want to build”, also underlines Emmanuel Macron in Challenges.
“I reject the idea that mayors no longer want to issue building permits”, retorts with Echoes Thierry Repentin, various left mayor of Chambéry (Savoie) and co-president of the housing working group of the Association of Mayors of France (AMF). “But we are facing much stronger constraints than before and we are also much more demanding on the projects”, he says, referring in particular to the objective of “zero net artificialisation” introduced by the climate and resilience law.
“There is no longer any interest in building because there is no longer a dynamic link between tax revenue and the arrival of new inhabitants, which will generate new expenses for the municipality”, advances for his part. to Echoes Jean-Philippe Dugoin-Clément, mayor (UDI) of Mennecy (Essonne), due to the abolition of housing tax on main residences.
Difficulties in accessing credit
Difficulties in accessing credit for buyers, due to the rise in interest rates, also explain the current difficulties and have consequences for the real estate market. Faced with the “significant slowdown” in real estate credit observed since the beginning of 2022, French banks are however ready to “discuss” regulatory easing, said Friday May 12 the director general of the French Banking Federation (FBF) , Maya Atig.
Bruno Le Maire had mentioned on May 4 possible “easing” of the rules in force since January 1, 2022. The Minister of the Economy had planned to discuss the derogations with the Governor of the Banque de France, who had on his side underlined not wanting to “push into over-indebtedness”.
The average mortgage rate exceeded the 3% mark in March for the first time since 2014, reaching 3.04%, according to calculations by Crédit Logement published on April 18, enough to deter or even rule out many borrowers. “Access to the market is becoming more and more difficult, both for borrowers with low personal contributions and for wealthier households,” argue the authors of the CSA Observatory / Credit Housing. The policy of the central banks to counter inflation indeed increases the cost of money for the banks, which pass it on to their customers to maintain their margins.