New study confirms unprecedented crisis facing new housing in 2024

Data for the last 12 months

For sale

The figures unfortunately confirm a crisis of unprecedented scale: the number of homes put up for sale fell by 39% over a rolling 12 months (September 2023 to August 2024 vs. September 2022 to August 2023).

Sales have stopped in most major metropolitan markets: -28% in Bordeaux Métropole (1.300 homes), -42% in Lyon Métropole (1.950 homes), -47% in Lille Métropole (800 homes), -66% in Montpellier Méditerranée Métropole (500 homes), -72% in Aix-Marseille-Provence (770 homes), -44% in Toulouse Métropole (1.920 homes), -50% in Ile-de-France (9.135 homes).

Ultimately, 53.380 new homes were put up for sale over a rolling 12-month period, compared to 88.650 over the previous 12 months, penalizing the renewal of supply. In addition, the number of homes withdrawn from the market (abandoned or standby programs) more than doubled… to represent approximately 15.000 homes over the period, corresponding to a withdrawal rate of 22% of homes put up for sale.

Booking

Already noticeable in the second half of 2023, the number of retail reservations shows a new decline, by -26%, and reaches a historically low level of 50.300 reservations, over 12 rolling months. Two times less than during the period 2019-2022, and this despite the covid crisis in 2020 and the lockdowns that froze the market.

There was no rush on the part of individual investors wanting to take advantage of the last year of the Pinel scheme: they represent only 1/3 of reservations, their share in sales "loses" 6 points.

Commercial offer

The available commercial supply falls below the 100.000 housing units available for sale (95.000 housing units nationwide). This may seem consistent if we compare this figure to the low level of sales (degraded household solvency), but in reality a stock of less than 100.000 available housing units does not boost sales. Also, the share of "hard" stock (housing units available and already built) is increasing and represents 7% of the available supply, compared to 3% 12 months ago. Similarly, housing units under construction and still available for sale now represent 47% of the stock, compared to 40% a year ago.

Price

Several metropolitan markets are experiencing price drops: -3% in Ile-de-France or Bordeaux, -4% in Nantes or Montpellier, and up to -7% in Lyon. Nationally, the average price/m² will drop by 3% in the second quarter of 2024 compared to the first.

Bulk sales

With more than 22.000 homes sold en bloc in the first half of 2024, compared to 15.600 in the first half of 2023, the number of "VEBs" is increasing, and should represent a significant share of sales among developers, probably close to 55% at the end of the year.

Regarding the intermediate rental housing segment, institutional lessors are still playing their counter-cyclical role in the crisis in 2024, even if the number of LLI acquisitions, whose model is highly consuming of equity, is starting to decline, after a year 2023 which will mark a high peak. This is also linked to the fact that there are fewer opportunities, less stock, or simply stock that has not interested the two major players. Production will then be impacted by the closure of the CDC Habitat and Action Logement recovery plans.

PROSPECTS AND ACHIEVEMENTS

2024

The outlook for the full year 2024 is bleak, with probably less than 50.000 retail sales. The situation will be worse than during the crises of 2012 and 2008 (of financial origin), 2000 (sudden increase in interest rates linked to the bursting of the internet bubble). At the worst of the crisis of 1995, there were still 61.000 reservations…

Private investors should represent only 15.000 to 16.000 sales in this last year of the existence of Pinel, far from the 60.000 achieved during the boom period of the tax exemption scheme. Owner-occupiers should represent between 30.000 and 35.000 sales.

Social accession schemes, PSLA or 5,5% VAT, have fallen by 22% over 12 rolling months, to represent around 6.500 sales. Only the real solidarity lease, whose eligibility criteria have been extended in 2023, has seen an increase: +45% of sales, but on a volume that is still marginal (2.900 sales over the period).

On the bulk sales side, their historically high volume of more than 50.000 sales projected in 2024 allows developers to find commercial exits for some of their programs, to partially compensate for the fall in retail sales, and for social and institutional landlords to develop a social and intermediate rental offer.

Au-delà

Regarding the future supply of the market, with only 343.100 housing units authorized for construction between September 2023 and August 2024, i.e. 36.000 fewer than in the previous twelve months (-9,5%, the lowest point since 1992), this will result in a low level of sales in 2024 and 2025. The commercial supply will take a long time to rebuild, not helping the activity to restart...

Faced with prices that remain high, the crisis will continue in 2025. Reason for hope in the short term: the fall in inflation (2% by 2026 according to the Banque de France) should favor a decrease in interest rates (3,8% in September 2024, and a hypothesis 3% in spring 2025). Coupled with an adjustment in the prices of new real estate, this situation should bring a rather welcome breath of fresh air to household solvency.

For Simon Chapuy, director of the Real Estate Developers Market, ADEQUATION: "The real estate development market is going through an unprecedented crisis, marked by a drastic drop in activity and a scarcity of new projects. This situation, unprecedented in 30 years, is the combination of a multitude of causes, exacerbated by prices that structurally cannot fully adjust to household solvency, degraded by the rise in interest rates that have returned to normal. Developers find themselves in an impasse, unable to meet the growing need for affordable housing. Marketing new programs is difficult, to the detriment of margins that can shrink alarmingly. The real estate development sector is experiencing a deep blockage, which will inevitably result in significant tensions on the real estate markets."

Illustrative image of the article via Depositphotos.com.