The Fédération des Promoteurs Immobiliers de France is worried
The Fédération des Promoteurs Immobiliers de France (FPI) has just published an overview of the French property market, based on its own figures, which cover 82% of the market. The findings are alarming: sales of new homes to individual buyers fell by 27% in the first half of 2012, and the situation worsened in the second quarter (29%).
The number of homes put on the market also fell by 21% in the second quarter, five points more than in the first half of the year, compared with 2011. These results worry the federation because, at the same time, the commercial supply has reached 61,424 homes, an increase of 11%, representing 13.1 months of sales. However, this rise in supply, which is mainly explained by the drop in sales, needs to be put into perspective: in a sample representing two-thirds of supply, 45% consists of schemes still in the pre-sale phase, which may yet be abandoned. As a result, the supply of completed homes or homes under construction should hardly exceed 35,000 units, or 7 to 8 months of sales.
The decline is compounded by a fall in individual investment, which reached 49% in the second quarter of 2012. The federation attributes this fall to four combined factors:
- a sharp reduction in the tax relief granted to buy-to-let investment;
- weak home ownership in the new-build sector, due both to the significant cut in support for first-time buyers following the reform of the PTZ+ (interest-free loan scheme) at the end of 2011, and to households holding back in an uncertain economic climate;
- high prices, driven by the twin effects of spiralling land costs and construction costs pushed up by the accumulation of standards and improvements in build quality;
- tighter lending criteria.
As for housing prices, they are down 3.4% in Île-de-France but up 2.2% in the regions, resulting in a national increase of 1.2%. This stability in prices, which has been apparent for 18 months, is partly due to the caution of developers, who have scaled back their projects and therefore their stock, and also to unmet demand, estimated at between 500,000 and 1,200,000 homes. Housing starts fell by 14% in the second quarter of 2012.
According to François Payelle, president of the federation, “the fall in both sales and housing starts is very worrying. If this situation were to continue, it would have very negative consequences for our companies and their employees, for activity and jobs in the sector, and for the housing of our fellow citizens” […] “yet solutions exist and are the subject of a consensus among all those involved in construction, both public and private. The FPI is fully committed to supporting the Government in delivering the President of the Republic’s pledge and thereby helping to resolve the housing crisis facing our country”.
The federation’s forecasts for sales to individual buyers struggle to pass the 75,000-home mark for 2012. The annual target set by the President of the Republic is around 500,000 homes, which requires 150,000 homes to be sold by developers. It is estimated that each home built per year corresponds to two jobs in France.