It certainly conditions the framing of public finances and the implementation of support measures, some of which are crucial for the housing and construction sector; but it also constitutes an issue of institutional credibility, scrutinized by the financial markets internationally. Meanwhile, the construction sector, shaken by the real estate crisis, is struggling to recover, even though certain indicators tend to confirm that the worst is over. The conditions for a recovery are slowly being put in place (falling interest rates, household investment appetite, banking voluntarism, price moderation, etc.), but the ground remains fragile and only support measures could consolidate the foundations of a recovery. On the materials side, activity remains clearly bearish despite a rather encouraging change in trends.
A November in recovery
According to the still provisional data for the month of November, the materials activity would have increased slightly compared to October, after the recovery already observed in September. Thus, on the aggregates side, production would record an increase of +4,5% over one month and +7,1% compared to a year ago, the month of November 2023 having been, for the record, particularly poorly oriented, the base effect amplifying the evolution (CVS-CJO data). Over the last three known months, the aggregates activity thus stabilizes compared to the previous quarter (-0,3%) but also compared to last year (-0,1%). Cumulatively over the eleven months of 2024, aggregates production would show a decline of -4,5% over one year, almost the same rate as the cumulative evolution over twelve months (-4,6%). Regarding BPE, November deliveries also strengthened compared to October (+1,9%) but still remain -3,6% lower than those of November 2023 (CVS-CJO data).
During the last quarter from September to November, BPE production fell again by -2,9% compared to the previous three months, standing at -8,5% below the levels of a year ago. As for the cumulative activity over the eleven months of 2024, it is down by -11,8% year-on-year.
The UNICEM materials indicator tends to confirm the moderation of the rates of decline in activity. With an index of 84,9 for the month of October, it rose by +1,5% compared to September but remains down -1,9% over one year (CVS-CJO data). Over the three months from August to October, the indicator recovered by almost 2% compared to the previous three months but still lost -3% compared to last year. Cumulatively over ten months, it describes an activity down -7,4% over one year, i.e. a rate in clear moderation compared to the beginning of the year (-15,5%).
Building: some signals in the thick fog
Surveyed by INSEE in December, construction professionals are looking gloomy and the business climate continues to darken. Their opinion on past and expected activity continues to deteriorate, now well below their long-term average. In structural work, professionals' judgment of their orders is particularly poor, while the volume of orders in months has hovered around 8,6 months since this summer, a level that remains relatively high compared to the long-term average (6,5 months). However, it is in the new housing sector that companies are most worried about their future activity, with the balance of opinion at its lowest levels since 2015 (excluding the COVID episode). It is true that the latest figures from the Ministry on construction reflect a worrying situation: from September to November, housing starts fell by -8,6% compared to the previous quarter (CVSCJO data), leaving the year-on-year decline at -9,6%. Cumulatively over twelve months, at the end of November, there were 258.500 housing starts, i.e. 16,2% fewer than twelve months earlier.
As for the non-residential sector, the situation is no better. The number of premises started fell by -17,3% over the same quarter over a year, leaving the cumulative total for the last twelve months at -12,6% for a total of 19,98 million m². However, the rates of decline are tending to moderate, particularly with regard to permits. Thus, housing permits recovered by +1% between the September-November quarter and the three previous months (CVS-CJO data), leaving their level 9,5% below that of a year ago. With 330.900 units in the annual cumulative total at the end of November, permits remain down by -11,9% over a year, a rate half as high as a year ago (-25,7%). However, these changes do not necessarily reflect a recovery.
However, some indicators suggest that the trough has passed: according to the Housing Credit Observatory, housing credit production is recovering, particularly in new construction. The slowdown in inflation, property prices and interest rates (3,37% in November compared to 4,2% at the end of 2023), coupled with a more dynamic banking offer, have thus contributed to reviving households' intentions to purchase real estate. At the end of November 2024, credit production activity in new construction, measured on a rolling annual basis, has stopped declining (0,0% compared to -41,7% in November 2023) and the number of loans granted is increasing rapidly (+32,8% year-on-year compared to -38,5% a year ago!). It is true that transactions are quivering: even if market activity remains at a low level compared to the past, reservations for new housing by individuals increased in the third quarter (+4,6% compared to the second quarter and +5,8% over one year), and this for the third consecutive quarter. The lack of economic and political clarity, difficulties in accessing land, and regulatory rigidities are, however, all factors that are holding back developers in their property supply policy. Thus, sales continue to decline significantly, by -5,7% compared to the second quarter, i.e. a supply level 30,4% lower than that of the third quarter of 2023. This imbalance should, in the long term, contribute to pushing prices upwards: for apartments, the latter have already almost stopped falling in the third quarter (+0,2% compared to the previous quarter and -0,5% over one year) while for houses, they have started to rise again (+5,5% and +1% respectively). According to Markemétron, the market for single-family home builders is slowly picking up. The sales recovery is slow but is confirmed over the months; for the first time since November 2021, transactions measured on a rolling quarterly basis have resumed their increase (+1,6% over one year) and the annual level could reach 50.000 units in 2024, "limiting" the decline to -15% compared to -45% in 2023. However, this improvement remains very gradual and, given the transmission times, it will take a few more months before spreading to the construction and materials sectors. It goes without saying that the future political and budgetary orientation will condition the continuation and amplification of this movement. The institutional episode currently unfolding is crucial for the sector in this sense.
A good month of November in TP
According to the latest monthly bulletin published by the FNTP, the sector's activity recorded its best month of 2024 in November. The work carried out thus increased for the second consecutive month (+2,2% over one month and +9,5% over one year, data in volume, CSVCJO) bringing the increase in activity to +3% cumulatively over eleven rolling months. Even if this growth concerns the majority of specialties, it remains uneven depending on the territories and above all, it is less dynamic than it should be one year before the elections; the federation points out the effects of the climate of political uncertainty and the lack of budgetary clarity, conducive to the wait-and-see attitude of public and private actors, who are more reluctant to invest.
Illustrative image for the article via Depositphotos.com.