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Edition November 7, 2017 - Crédit Agricole S.A.
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  • Edition November 7, 2017

    France - Housing Market: Recent developments and outlook for 2018

    The housing market grew at a sustained rate in 2017. The market is likely to see a slight slowdown in 2018-2019, however. First off, the new Housing Plan, unveiled in late September, is favourable over time via a supply-side shock, plus a four-year extension to the Pinel scheme and the PTZ interest-free loan. Second, the relative acceleration in prices and the continued slow increase in lending rates will eat into households' ability to purchase.

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  • Content:

    - Recent trends in pre-owned and new-build
    - 2016-2017: a highly sustained market
    - 2018: slight dip probable
    - Focus - Housing reform plan

  • Extract – Impact of the housing plan

    The supply-side shock measures (deregulation of public and private land ownership, simplification of construction regulations, efforts to discourage abusive legal claims) are designed to ultimately lead to increased housing supply and lower costs, and hence to lower new-build home prices. But the impact will be gradual and probably fairly limited despite the incentives, because municipalities, which deliver building permits, tend to favour commercial real estate construction over building homes.

    The refocusing of the PTZ interest-free loan on areas where the housing market is tight has, in the main, been deferred until 2020 and so will have no effect in 2018. The reduction from 40% to 20% of the interest-free loan component in the purchase cost will, however, cause the number of new-build purchases to fall. The Housing Plan's main impact on sales in 2018 concerns the Pinel buy-to-let scheme. Its refocusing will result in a drop in buy-to-let sales of between 6,000-10,000, as zones B2 and C are now excluded from the scheme. Developer new-build sales are thus likely to fall by 5-7% relative to 2016.

  • Associative topics : Economics | France | Real Estate


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