New housing sector set to improve in 2016
Construction companies are banking on “the start of a recovery” in 2016, with a projected increase of 0.9% in their activity, mainly driven by the construction of new housing.
Construction of housing residences (for senior, students or within the tourism industry) exploded in the third quarter of 2015, growing by 34% to 5,600 units, according to figures released by the Housing Ministry.
While construction of regular housing didn’t perform as well, on the whole, the new build sector recorded a 0.7% growth, announcing a timid start to its recovery. Additionally, building permits rose by 2.3% between July and September of last year.
Construction companies should begin to see a net improvement in their activity from this year onwards, according to the French Building Federation (FFB). The federation predicts an increase of 0.9% in construction over this year, stating in a press release that “the year 2016 will see the start of a recovery, mainly due to the predicted recovery of the new housing sector.”
The FFB believes that new built units will reach 380,000 over the year — an increase of 35,000 units over last year.
The construction sector had recorded a 3.9% drop in building volumes in 2015 and suffered 30,000 job cuts because of falling activity. Nonetheless, this is an improvement on 2014, where building volumes had dropped by 11.5%.
Jacques Chanut, the head of the FFB, acknowledges the government’s efforts to encourage construction. “These measures are convincing, but nonetheless, the sector remained stuck this year.” He expects that the sector will not return to experiencing sustainable growth till 2017.
Nevertheless, “many positive signs appeared” in 2015, according to him, such as increased sales for promoters and builders, which grew by about 20% between September 2014 and September 2015. Building permits also exhibited a timid increase in 2015 (by 1.6%), experiencing “significant progress” in the second half of the year. Given these positive indicators, new housing could see its business grow by 5.5% next year, according to the FFB.
Finally, President Hollande’s decision to expand the interest-free loan from the beginning of 2016 onwards could allow between 35,000 and 40,000 additional households to invest in a new home, subsequently boosting the market. Jacques Chanut welcomes the expansion of the interest free loan, a measure he deems “a simple and powerful tool present across the country and in which we invest a lot of hope.”
Photo credit: Wikimedia / Till Krech