2023-08-17 10:08:51
The new housing market is in crisis: here is a new proof. Bookings with property developers tumbled around 40% in the second quarter of 2023, year-on-year, according to the Ministry of Ecological Transition. With less than 18,000 homes booked, lettings recorded a fifth consecutive quarter of decline (see graph below). Even during the Covid crisis, this statistic had not fallen so low, reservations are 18% lower than those recorded in the second quarter of 2020.
The reason? The surge in the mortgage rate which has weighed on the purchasing power of households. They can no longer afford to buy a home. Even houses, which were very popular during the health crisis, are bearing the brunt of this crisis. The drop is spectacular: -45% over one year. Ditto for apartments: -39.5%. Falls equivalent to that of the number of loans granted by banks. Because almost all buyers take out a loan to buy a home. “The government must take the measure that certain decisions taken when demand is strong and sustained turn out, with the market downturn, to be totally counterproductive.. It is vital to reconsider these decisions to avoid sinking even further into the crisis.“, denounces Pascal Boulanger, president of the Federation of real estate developers. The risk is all the greater since, contrary to the market for old properties, the prices for new properties continue to soar. Developers estimate that the average price of collective housing in France is 4800 euros per square meter. For a detached house, expect a 35% higher price.
Marketing of new housing Photo credit: Ministry of Ecological Transition
The extent of this drop in new housing is even more spectacular than in the market for old properties, where declines of 15% to 20% in sales have been recorded to date. The reason? Developers are suffering not only from difficulties in accessing credit for buyers but also from soaring construction costs. The reduction in aid for new construction, announced in June, with the abolition of Pinel, a tax exemption system, and the refocusing of zero-rate loans, is also not unrelated to this new housing crisis.
The majors diversify their activity
Large groups, such as Vinci whose reservations have plunged by 36% in one year, Bouygues which shows a drop of 14% over the same period or even -20% for Nexity, are not spared. “We have seen the warning signs of this crisis for about three years, and we note that the responses provided by our governments are not up to the challenges of the sector.“, criticizes Xavier Huillard, CEO of Vinci. To cope with this, the promoters have decided to diversify their activities. Thus, Altarea has sharply reduced its investments in real estate development, buying much less building land and launched at the beginning of the year in logistics warehouses, data centers and photovoltaic installations. On the side of Kaufman & Broad, an erosion of 11% of housing reservations was compensated by a mega office project in the district of the Gare d’Austerlitz in Paris. Very bad news for households who still hope to afford a house. The dream of nearly 75% of French people but which is getting further and further away.
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