New-Build Construction in France Slows in Second Quarter
Figures from the government show that new-build construction in France has slowed in the second quarter of the year while increasing year-on-year.
The government department responsible for housing has released its construction figures for April to June. While this year is still outperforming 2016 by some distance, the second quarter has failed to live up to the construction frenzy of the first.
April to July saw 101,300 new residential properties built in France, an 8.7% increase year-on-year. This is a marked deceleration from the first quarter, which had a year-on-year growth figure of 18.5%. The Government Ministry for the Cohesion of Regions, the new department in charge of housing, released the figures.
The number of new-build permits issued showed a similar trend. A 10.4% increase on last year, lower than the first quarter’s 15.9% figure. Around 118,800 new-build permits were issued from April to June; significantly higher than the construction figure which is normally the case as some developments will be blocked or fall through.
The year figures look good, too. In the last 12 months new-build construction in France has reached 397,700, 14.4% higher than the previous 12 months. Permits issued were at 474,100, 13.2% higher than June 2015 to June 2016.
“You have to go back five years to find a similar level of activity,” pointed out Alexandre-Francois-Cuxac of the FPI. “Even so, these second quarter figures appear to show a slowing of the market’s growth. While only a symbolic threshold, we still haven’t breached the 400k figure.”
A further breakdown in the communique was given for types of properties. Ordinary residential properties made up the bulk of the numbers with 94,900 units built, while homes for seniors and student accommodation totalled 6,400. Growth in ordinary units outpaced the overall new-build figure, increasing 9.5% year-on-year; seniors and students’ units’ construction was down 2%.
Experts cite several factors behind the figures which, despite the slow from the first quarter, are still positive. Low interest rates and the Pinel mechanism are among the most important. Mortgage rates are around 1.56% on average, according the Observatoire Credit Logement/CSA.
Jacques Mezard, Minister for the Cohesion of Regions, indicated on Tuesday last week that he would not put a ‘abrupt end’ to the Pinel device, which gives a tax exemption on rental income to buy-to-let investors buying new-build properties. He promised a “balanced solution, especially bearing in mind the fiscal receipts that it has generated for the government.”
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