The FPI, bringing together real estate developers in France in housing and commercial real estate, publishes the figures for the third quarter of 2019 of its national statistics observatory, barometer of advanced housing indicators in all regions of France, launched in 2010.

As has been the case for several quarters, the most worrying finding concerns the sale of new real estate programs: in Q3 2019, the promoters have put up for sale only 20,000 homes, which is 5,000 fewer than in Q3 2018. The offer the sale of new homes is down 14% and the stock is less than 9 months of sales in several major cities (Ile de France, Rennes, Nantes, Strasbourg, Montpellier or Rennes). There were 60,000 housing projects in early 2018; there are only 45,000 today.

This decline in supply has two explanations: the issuance of building permits in the collective is in free fall (on annual average , there are 40 000 collective dwellings authorised in permit less than two years ago): number of local elected officials, in the run-up to municipal elections, do not wish to grant building permits by fear of unpopularity and recourse. Then, when permits are issued, the cost of work too high, the availability of increasingly smaller construction companies or neighbourhood remedies, slow down the supply of new housing.

The result is a sharp drop in housing starts and a pressure on the prices of new homes, which are on average 4.7% higher at national level than in Q3 2018, in a real estate sector where, overall, prices are growing faster than inflation, particularly because of low interest rates.

For Alexandra François-Cuxac, President of the FPI France:

“New housing in 2019 is the story of a missed opportunity, that of production, growth, jobs and the satisfaction of housing needs. Forced by the lack of permits and the increasing difficulty of completing operations, our programs come out very little, and too slowly. We had 60,000 homes planned early 2018, we have only 45,000 today. It’s a feeling of waste that lives in us. The Congress of Mayors next week will be an opportunity for me to raise awareness.”

This frustration is all the greater because, faced with this constrained supply, demand is generally stable in Q3 2019 compared to Q3 2018, and if it drops by 3% over 9 months, it remains at a high level.

This general trend hides different dynamics in different markets.

Personal sales (-4.2%) are durably driven by home ownership, which confirms its solidity month after month, when personal investment declined sharply (-7.2%). While the borrowing conditions remain very favourable and the stone remains attractive, it is the reduction in the supply of new housing and the rise in prices it generates that lead to a decline in sales to individuals.

Block sales, for their part, rebounded sharply this quarter (+ 22%) but remained down in the first nine months of the year (-4.3%). HLM sales continue to be impacted by the reorganization of the sector, but sales to mid-market and institutional investors are beginning to pick up and take over. This trend remains to be confirmed over time.

For Alexandra François-Cuxac, President of the FPI France:

“We are only able to satisfy a demand that remains strong by drawing on inventories, without succeeding in reconstituting them quickly because of a lack of building permits. The constraints on the supply of new housing are fearing a sharp decline in sales and building sites in 2020. The Lagleize report comes at the right time to lift the brakes on construction, we expect a lot from its implementation.”