New real estate breaks down and makes developers fear a "deep crisis"

The statistics, published Friday by the Ministry of Ecological Transition, of the marketing of new housing, are cause for concern.

Reservations by individuals with promoters continued to decline during the year. In the last quarter, with 22.500 reservations, they were barely above their level during the spring 2020 confinement.

In total, individuals reserved some 110.000 homes in 2022, or 15% less than in 2021.

"It's not good at all, and unfortunately, what we predicted is happening," regrets Grégory Monod, president of the Pôle Habitat of the French Building Federation, which represents developers, house builders and developers. “Collective housing is sinking inexorably, slowly but surely, into a deep crisis, and we see it even more through the marketing figures,” he says.

Since 2020, professionals have been warning about a lack of supply, pointing to the reluctance of mayors to sign building permits.

The number of sales over the year also fell in 2022, by 6%, to around 110.000.

"We have seen our supply figures fall apart. And for the past few months, demand figures have also been in free fall", laments Pascal Boulanger, president of the Federation of Real Estate Developers (FPI).

The lack of supply, he points out, automatically leads to a drop in demand. "It's a truism: you can't sell what you don't have to sell!"

Disclaimers

But it is above all reservations that are being slowed down.

How to explain it?

First, buyers are caught between high selling prices and dwindling purchasing power.

“We have reached price levels that have exploded, with the increase in the cost of materials and the surge in rates”, notes Grégory Monod.

The costs of raw materials, and therefore construction sites, have indeed increased in the wake of the war in Ukraine.

Promoters must therefore sell at a higher price for their operations to remain profitable... but individuals cannot keep up.

"Trees do not climb to the sky", grinds Pascal Boulanger.

The rapid rise in interest rates, combined with regulations on usury rates, which prohibit banks from lending beyond a certain rate, have prevented buyers from obtaining their credit.

This explains why withdrawals have been more and more numerous: in the last quarter, cancellations of reservations represented more than 20% of the total, according to figures from the ministry.

There are also buyers, "minority" among the withdrawals, "who book, then say to themselves + it's not the time + and who cancel without reason", says Pascal Boulanger.

Faced with these constraints, more and more promoters prefer to postpone the launch of certain operations or even give them up; this happens in nearly one in five cases, according to Pascal Boulanger.

As for block sales, that is to say sales of entire buildings, the situation is no better, with a 20% drop in reservations in 2022. Mainly due to social landlords.

The rise in interest rates has indeed inflated their debt, and energy renovation sites are already monopolizing a good part of their investments.

“We have a lot of concerns for 2023,” says Didier Poussou, director general of the Federation of Social Enterprises for Housing (ESH), private social landlords.