Decrease in housing permits in the third quarter and small recovery in housing starts before a probable reconfinement

Between July and September, 99.900 permits were granted, a decrease of 11,5% compared to a year earlier, according to the Ministry of Ecological Transition, on which Housing depends. Housing starts advanced 6,3% to 94.000.

New housing is therefore struggling to recover after a collapse during the second quarter, marked by strict confinement decreed by the authorities against the spread of the coronavirus.

At the time, housing starts, which indicate which homes have actually started to be built, had seen their number fall by nearly a quarter. As for building permits, the best indicator of future trends, their quantity had fallen by almost half.

The summer has therefore not made it possible to fully turn the situation around, while President Emmanuel Macron will announce new restrictions on Wednesday evening, the executive considering a new confinement.

Over the entire twelve months at the end of September, the number of housing starts fell by more than 5% and that of permits by 10%.

The landscape is particularly gloomy for buildings, qualified as collective housing. The number of permits dropped by nearly 15% over the same period.

The housing world, primarily real estate developers, is worried about multiple factors that go beyond the health crisis alone.

They believe that the municipal elections, whose campaign was extended by three months by confinement, pushed local elected officials to limit permits. Then that the situation continued, the time for the new teams to set up.

Real estate players react to the numbers

The summer did not really revive the creation of housing, weighed down in the spring by the outbreak of the health crisis. Still gloomy, the figures let the sector fear a lasting crisis, even as the epidemic resumes and the executive is considering an imminent reconfinement.

"I do not see a strong recovery at all. The figures are worrying (and) are not reassuring", declared to AFP the president of the Federation of real estate developers (FPI), Alexandra François-Cuxac, on the occasion of the quarterly figures on the sector.

Published by the Ministry of Energy Transition, on which Housing depends, the picture is mixed. On the one hand, there are more housing starts, that is to say housing for which construction has really started, (+ 6,3%) than a year earlier.

More "it's normal that this rebound takes place", minimized Ms. François-Cuxac. "Everyone has mobilized to make up for the delay on the sites at the start of the school year."

In fact, this figure is misleading in several ways. First, it only marks a small summer recovery after a collapse in housing starts - nearly a quarter - in the previous quarter, at the heart of the strict confinement decreed by the authorities against the spread of the coronavirus.

These restrictions blocked many construction sites, the time to put in place health security measures. And the summer catching up was not enough: over the twelve months passed at the end of September, construction starts are significantly lower (-5,6%) than a year earlier.

Above all, another indicator is more worrying for the future. Building permits, which really herald the trend for the coming months, saw their number drop again during the summer when they had already fallen by almost half in the second quarter.

"We don't see any real improvement", warns to AFP Alain Tourdjman, economist at the banking giant BPCE.

In terms of housing, "the major effect of the crisis is likely to be observed more in 2021"he insists. "The projections that can be made (...) seem to me in all respects worrying."

Shy elected officials

The results are all the more disappointing since the summer was marked by deconfinement and the resumption of economic activity. However, the government is now on the verge of announcing new restrictions on Wednesday, to the point of considering a new four-week confinement.

A lasting decline in new housing would be of concern beyond this single economic sector. A sufficient supply of housing is in fact the guarantee of a market where prices do not soar, which in turn is a crucial issue for an economy emerging from the crisis.

Mr Tourdjman estimates that less than 350.000 new homes could be built next year - the last few years have been around 400.000.

"We don't necessarily need to build 400.000 homes", he qualifies, but, according to him, this would imply an in-depth review of public land-use planning policies by supporting more actively the development of small and medium-sized towns where many vacant dwellings are accumulating.

For the time being, and despite the rise of teleworking in times of health crisis, it is the large agglomerations that concentrate the demand for housing with the capital, Paris, as their emblem, where prices have gone to settle well beyond of 10.000 euros per square meter.

Why, in this context, do the mayors not grant more permits? Observers agree on a set of unfavorable factors.

Not only did the crisis and containment freeze the examination of permits, but elected officials were also encouraged to timidity by an endless municipal campaign, extended by three months by the crisis.

Since then, professionals have noted little eagerness among the newly elected, whether because their teams are slow to take their marks or because the political context seems less favorable to construction with in particular the coming to power of several environmental mayors in big cities.

"Everything is a pretext for not accepting the other next to home", regrets Ms. François-Cuxac. "The mayors are those who must accompany this acceptance (but) in places, I feel elected officials tired, tired of this fight."

A sign that the government is aware of the issue, it has provided a budget of 350 million euros to reward the mayors who build the most housing.