Demand for new homes and apartments in France has failed to rebound after two poor years and industry professionals are now worried 2014 will be a “black year” for the sector.
Despite the government’s “Target 500,000” initiative to plug a gap in the housing market by building half a million new properties and renovating 500,000 buildings a year before 2017, house-building in France remains lackluster.
Figures released on February 25 by the French Ministry for Territorial Equality and Housing show that the granting of building permits and the start of new building projects decelerated sharply in the three months to January 2014, further deepening a year-long trend.
The number of building permits dropped by 15.2 percent in 2013 and in the first three months of this year, it was down 18 percent. Meanwhile the number of housing starts for the year only dipped by 2.4 percent, the three months to January recorded a 9.2 percent slide.
Sales have also stalled. The Federation des Promoteurs Immobiliers, the French developers’ union, has warned that while sales of new builds have remained stable in 2013 compared to 2012, they were down 32.4 percent from 2010.
Costs have risen for developers as land has become more expensive and complex regulations add to building time. “Fifteen to 20 years ago, between the moment we met a land owner and the moment we sold the property, 4.5 years would have passed, nowadays it’s 6.5 years. This lengthening weighs on cost,” Francois Payelle, president of the Federation des Promoteurs Immobiliers told CNBC.
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