Building activity: no further improvement in sight
The abandonment of the 2025 finance bill and the housing measures outlined therein leave little hope for new housing, even if the continued improvement of mortgage credit conditions will limit the damage. In fact, after having fallen to their 1953-1954 level with around 250.000 units in 2024, new housing starts would fall to nearly 240.000 in 2025. And the trend could continue since, if nothing is done on the budgetary level and concerning the ZAN, building permits would fall by 15% that same year. A crisis of such magnitude, reducing volumes to their lowest levels since the Second World War, spares no segment, neither individual nor collective, neither accession nor rental, neither private nor social housing, nor metropolitan areas nor rural territories. This is indeed a systemic shock.
The situation is barely less bad in new non-residential construction. While a landing trend was emerging in recent months, the "PLF-PLFSS and government censure" sequence dampened hopes, leaving professional clients and local authorities in full doubt. Admittedly, the immediate threats appear less for them, but there is no guarantee that they will not return with a finance law voted on at the beginning of next year. After a historic low (since 1986 at least) at just over 20,1 million m2 started in 2024, the decline would continue in 2025 with a score just below 19 million m2 expected in 2025. And, here again, the 3,5% drop in permits that same year does not suggest a recovery before the beginning of 2026, at least at this stage.
It should be noted that, given the context already mentioned, these forecasts include a simple quasi-stabilization of the surfaces started for new administrative buildings. The real impact of the municipal electoral cycle would therefore be limited.
From the above, it can be deduced that the production of new housing would collapse by 14,2% in 2025; as for that of new non-residential, taking into account generally longer completion times, it would fall by 15,0%.
Only the improvement-maintenance activity would continue to grow, at a moderate rate of 0,9% in 2025, excluding the price effect. However, this overall figure masks market transformations; mainly driven by non-residential in 2024, while the failed reform of MaPrimeRénov' at the very beginning of the year heavily penalized housing, the trend would reverse in 2025 due to the general wait-and-see attitude of professional clients, but also the small dynamic (base effect) introduced by the maintenance of the current scales of MaPrimeRénov', subject of course to maintaining a favorable CEE premium regime.
Overall, after -0,9% in volume in 2023, building production will drop by 6,6% in 2024 and the FFB is currently forecasting a further decline of 5,6% in 2025.
Production equipment: evaporation of productivity, risk for companies
The 2024 development slightly worsens the Federation's activity forecast unveiled last December (-5,5% excluding price effects); the same is not true at all on the employment side. In fact, in line with the development of production, it had anticipated a fall of 90.000 jobs, starting from a historic level since the Second World War according to official data; the observation is limited to 30.000 jobs lost in 2024. In the immediate term, this is good news, moreover confirmed by a limited damage on the business side: bankruptcies are "only" increasing by around 25% in 2024, returning to their 2016 level, a fairly good year in its time.
The fact remains that this hiatus opens up the issue of productivity in the sector even more widely than in the past, or, to put it another way, the risk of weakening companies with a payroll that is out of line with the expected level of activity. Failing to understand the gap on the one hand, and being able to imagine that it will continue without the hopes born of the 2025 Finance Bill on the other, the FFB can only mechanically postpone the collapse of employment to next year. It therefore anticipates the disappearance of 100.000 jobs in 2025, if nothing changes.
This last precaution must be emphasized. In fact, the fragile forecasting exercise that precedes it will have to be revised once the finance law for 2025 has been voted on.
On the urgency of a finance law
Without resolute and rapid action, the collapse of the construction sector thus constitutes a real threat. This is why the FFB reiterates its request that a finance bill be urgently voted on in 2025 and that it include at least three measures that received cross-party agreement in recent debates in the Senate:
- the reopening of the zero-rate loan (PTZ) to all territories and all types of housing (individual and collective);
- exemption for one year from inheritance/gift tax up to at least 100.000 euros for the acquisition of a new main residence, while undertaking work on the status of private lessors;
- the reduction in the Solidarity Rent Reduction (RLS) and the unfreezing of the aid envelope for the energy renovation of social housing.
In addition, the FFB is requesting that the MaPrimeRénov' budget be protected at today's level, i.e. 4,2 billion euros.
Furthermore, it hopes that the policy of administrative simplification will be continued, particularly in terms of urban planning rules and practices, but also in terms of harmonisation of controls relating to assisted energy renovations, which would enable the scope to be broadened.
In making these requests, the FFB is not ignoring the budgetary situation of our country, but remembers that a well-oriented real estate activity is accompanied by good tax revenues for the Nation. All the more reason not to waste time!
Illustrative image of the article via Depositphotos.com.