Tuesday, April 24, 2012

Decline in new-build construction

A report in Le Figaro notes that construction of new-build properties declined by 12.9% in the first quarter of 2012 compared to the same period last year, based on figures from the French ministry of housing.

Although various commentators refer to 'the crisis' as the primary cause, it is more accurate to note that the withdrawal of the no-interest loan (PTZ) - aimed at first time buyers purchasing new-build properties - has had an undoubted effect on this sector of the market, since its withdrawal at the end of 2011. There are also signs that the buy-to-let boom, aided by policies such as the loi Scellier, bas slowed down. However many investors entered this sector without taking adequate precautions such as assessing the lettability of many new apartment bocks - only 50% even bothered to visit the site - and have been left with a property on their hands which is unlettable and probably unsaleable. The main reasons being poor choice of location, remote from public transport and other services particularly needed by tenants seeking low-cost rentals close to schools, shops and their place of work.

In another context, Standard & Poors predict a 15% drop in property prices during 2012. They are probably among the only people taking this view, and the Century21 property group talk more of 'price stability' for the next 12 months.

As always, the French property market is extremely varied. In my own region of Pyrénées-Orientales, there is a veritable construction boom south of Perpignan and in towns such as Argelès where new housing estates are appearing, specialising in individual high specification homes, built to the latest BBC norms.

Source: www.lefigaro.fr 24 April 2012