When will France emerge from the housing crisis?

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Fall in credit rates, restart of transactions in the old…. The prospect of emerging from the housing crisis is there, believes Henry Buzy-Cazaux, founding president of the Institute of Real Estate Services Management. But this crisis is not over, he warns.

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We hear contradictory speeches, and no doubt public opinion has a hard time finding their way… Authoritative voices are announcing a restart of transactions in the old sector, with supporting figures. Large national networks want to be reassuring, displaying astonishing performance progressions. A large national developer, a subsidiary of a financial institution armed arm of the State, indicated a revival in sales of new housing. Credit production data indeed reveals a recoverystill far from pre-pandemic performances for example. We start to believe that the end of the crisis is already underway.

At the same time, the economic press announced a multiplication of social plans among developers and discloses chilling statistics of business failures in the real estate sector, concerning developers, builders of individual houses and real estate agencies. Concerning independent negotiators, commercial agents engaged in the transaction within networks of agents or real estate agents, their number has been reduced considerably, going from nearly 100,000 to some 70,000 in eighteen months…

The housing market is still asthenic

We must be clear: the housing market is still sluggish. The positive signals cannot be denied, but we are far from the mark. The most indisputable proof is not to be found in the indicators referring to companies in the sector, but rather in the side of households, who experience unprecedented difficulties in renting and acquiring. This is the detrimental reality for the country, which of course has dark consequences on the economic fabric and on the tax revenues of the State and local authorities. When will housing finally be more accessible to the French, whether they want to buy new, existing or rent?
Two major problems must be resolved, the resolvability of demand and the renewal of supply. To date, the reconstitution of households’ contributory capacities has begun, but it is partial. The sudden rise in interest rates had driven a third of individuals and families out of the market, at constant housing prices. The fall in prices, almost everywhere on the national territory, accompanied by salary increases of 4.5% on average in 2023, supplemented by a rate correction since the start of 2024, has reintroduced into the game part of the third of French people who had been excluded, probably a third of this third, or 10% of households. Not to mention that this rebalancing of the market equation is fragile: at the slightest drop in rates, selling owners resist their prices, causing the number of acquisitions to decline again.

Rates at 3% in 2025

These delays between rate corrections and price corrections will continue. What’s more, the collapse of the new home market has led to a transfer to the old offerthe demand for which has increased. The ideal, with rates in the process of calming down, calmer prices and a new offer which will decongest demand in the existing sector will never be achieved: we get closer one day and it can move away the next day. Everything suggests, however, that the downward trend in rates will be confirmed in 2025, to allow us to reach a floor of around 3%, with new production which will slowly pick up again in 2025 and 2026, with great caution. .

Regarding the new, what will happen? For the moment, promoters are not relaunching operations and are content to sell off their stocks. They manage their expenses as closely as possible, particularly their payroll. The house builders, for their part, are waiting for orders to open a site: they are contractors and these brokers only inaugurate an operation when a house has been desired and imagined with the company to build a house, about a year later . Ultimately, developers, when the new zero-rate loan will be usable, from January 1, when the tax system introduced by amendment in the draft budget which reduces gift or inheritance taxes for all new housing acquired in 2025 for rental purposes will be available, only then will they purchase land and plan construction operations for collective buildings or row houses, which will only emerge from the ground three or four years later in the best cases. For the individual house, the time is shorter: the builders will relaunch their activity when the orders are materialized, which the new PTZ will not fail to cause if the PTZ can again finance the construction of a house, under conditions of fundamental sobriety.

Many unanswered questions

Another consideration may disturb the recovery, the municipal elections of 2026. The usual prudence of mayors a year before the deadline leads them to slow down construction in their municipality, so as not to change the major urban balances and worry their electorate… This pusillanimity could slow down the recovery, even if it is driven by a resolvable demand . This analysis is based on a stabilized internal and external political situation. However, the unknowns are multiplying: will President Macron dissolve the National Assembly again in a few months, a year – this is the minimum – after the previous dissolution? Won’t our real estate tax system deter the best wishes of buyers and investors by increasing their burden? In this regard, will the finance law not include too many malicious gestures towards housing? Donald Trump’s implementation of his recovery plan for the United States, by creating an abysmal deficit in his country, could worry the markets and raise rates, not only in the dollar zone but also in the euro zone: poor economic health in the United States, coupled with protectionism towards Europe, can penalize French companies involved in exports and weaken our own economy.

In short, glimmers of hope should not be overlooked or minimized. They cannot make us forget that the market, that of new goods and to a lesser extent that of existing goods, operates according to slow movements and groundswells. This means that the crisis is not over, but the prospect of getting out of it is there. In itself, it constitutes a fortifier. We learn to be content in this country.