The year 2024 was marked by the continuation and intensification of the real estate crisis in a turbulent political context (dissolution of the National Assembly, late appointment of a new government this summer and then, very recently, its censure at the end of the budget debates). While the figures for construction and sales of new homes have reached low points, dragging down all upstream and downstream sectors of the industry in their wake, some more positive signals suggest a change in trends. But the end of the crisis looks set to be long and gradual.
In this context, the aggregates and ready-mix concrete (RMC) sector will once again record a significant contraction in its activity in 2024, pulling production volumes to historic lows (estimated at 304 million tonnes for aggregates and 33 million m3 for RMC). Even though the real estate sector should slowly emerge from its lethargy in 2025, the delays in diffusion to the construction sector and the many political uncertainties should still weigh on the materials activity which, at best, would stabilise for aggregates, and could decline further for RMC.
2024: the year of “historic lows” in terms of activity volume
The epicentre of the real estate shock is now behind us. However, the shockwave has not yet finished spreading throughout the sector and the rest of the economy. The level of housing building permits, despite a gradual recovery, was still 10,5% below its level of the previous twelve months at the end of October and remained 23% below the average of the last ten years. As for construction starts, the recent increases are far from stemming the decline, which stood at -18,7% at the end of October over twelve months, i.e. a level around 30% below the average of the last decade. In total, the number of housing starts will reach a historic low in 2024, with probably fewer than 250.000 units. Further upstream, the prospects for real estate developers are tending to recover, after having passed low points, as are reservations for new homes which have resumed growth in the third quarter. But the level of sales, cumulatively over nine months, is still 10% lower than a year ago and, above all, on average 40% fewer new homes will be sold in 2024 compared to the last ten years!
The plunge in residential construction has brought with it that of construction materials, whose activity, measured by the UNICEM indicator, is expected to record a decline of around -8% in volume this year after a fall of almost -10% in 2023. The better orientation of the public works sector has, however, made it possible to limit the decline of certain materials, while those exclusively intended for the residential sector are recording strong contractions. Like the other trends described above, our materials indicator has been recovering for several months (+1,7% in the third quarter compared to the previous quarter, cvs-cjo data), but activity is still down -5% compared to a year ago and is around 16% below its 2021 level.
The good performance of activity and order books in the public works sector has indeed made it possible to limit the extent of the degradation of certain materials, particularly for aggregates, although the latter have not benefited from the same support as during previous electoral cycles. Indeed, the nature of public works projects in 2023 and 2024 has ultimately proven to be more "greedy" for BPE than for aggregates: mainly concentrated on the civil engineering segments, with urban development and transport projects in major cities, or on sanitation or network works, investments by local authorities have rather neglected the road and highway segment. Added to this is the now much more virtuous approach to resources, which leads our professionals to favour a circular economy approach by reusing materials (directly on site or via recycled aggregates from the treatment of demolition waste) for earthworks or road surfaces (asphalt milling, etc.).
In this context, material requirements have fallen significantly in 2024, by around – 12% for ready-mixed concrete and – 4% for aggregates.
2025: very limited recovery capacities
The conditions for a recovery have slowly been put in place in 2024 and have already helped to change the trends as described above. However, many constraints and uncertainties remain in the forecast scenario.
The drop in interest rates (-83 bps on average on bank loans between December 2023 and November 2024) coupled with a more proactive loan supply policy on the part of banks have enabled households to return to credit, the production of which over the last three months (September to November) has increased by +37% concerning purchases of new properties. The disinflationary movement and the slight decline in new property prices have made it possible to restore household solvency; their housing investment projects have been recovering for several months, as confirmed by the INSEE survey. However, we should not count on future price reductions to improve real estate purchasing power in 2025: the margins for reductions are indeed very limited, both in terms of consumer prices, the increase of which could remain around +1,5% next year (after +2% in 2024 and +4,9% in 2023), and in terms of new housing prices, which have only slightly declined and are already on the rise again in the third quarter of 2024. The scarcity of land, construction costs, the multiplication of technical standards, and the drying up of the supply of new programs are all contributing to maintaining high price levels. The adjustment of the new-build market is therefore not made through prices but through quantities, as evidenced by the recent drop in transactions.
Thus, only banking conditions and the implementation of support measures could increase household solvency. However, the prospects for interest rate cuts are more limited for 2025. Of course, the European Central Bank should again lower its key rates, but banks' margins will be constrained by long-term rates; especially since the climate of institutional uncertainty and political instability risks shaking up the financial markets and tightening government borrowing rates. As for the support measures, the most emblematic and the only one contained in the 2025 budget, namely the extension of the PTZ (zero-rate loan) to the entire territory and to individual housing, has not yet been able to succeed due to the vote of censure... Under these conditions, the rebound capacities of the real estate market, then of construction, should remain limited in 2025. After having fallen by nearly 137.000 units in two years, housing construction starts could recover timidly in the second half of the year (i.e. +10.000 units in 2025 according to our estimates). This sluggishness will weigh on the demand for BPE which will not really benefit from an improvement in construction starts of non-residential premises.
The public works situation, which the FNTP predicts will decline slightly overall next year, should however continue to fuel the materials activity in the segment of large operators whose activity should remain on the rise. On the other hand, uncertainties weigh on the investment of local authorities which represent 42% of the works. According to a note from the Observatory of Finance and Local Public Management [1] published last October, the latter's equipment expenditure should still increase by +5,9% in volume in 2025, the last year of the electoral cycle (after +5,5% in 2024). But budgetary and political constraints could slow down this expenditure even if the public deficit reduction measures contained in the Barnier budget have been ruled out to date.
Overall, demand for materials is not expected to recover next year. At best, a stabilisation is expected for aggregates, while for ready-to-use concrete, a new contraction, albeit much more modest than that seen this year, is still expected for 2025. Given the current context, this forecast exercise is subject to a particularly high degree of uncertainty, but it will in any event confirm a level of activity that is, once again, historically low.
The major topics of the profession for 2025
Highlighting the societal importance of mineral materials and quarries
Throughout 2025, UNICEM will carry out awareness-raising actions among decision-makers and the general public to promote mineral materials and to reveal the diversity of their uses, which are often little known, thus strengthening understanding of the importance of this sector for our daily lives and our future.
Furthermore, beyond their essential role in construction, aggregate quarries play a key role in the life of the territories by generating multiple added values. Among the services provided, we can cite initiatives in favor of renewable energies such as photovoltaics, the management and preservation of water resources, support for biodiversity, landscaping, the recovery and recycling of materials, or even cultural and societal actions. Added to this are local economic contributions, such as tax revenue and job creation. In 2025, a series of publications will highlight all of these contributions.
In 2024, a first brochure was published on photovoltaic installations highlighting 17 sites equipped with ground-mounted or floating solar panels, in service during or after quarry operations. This publication illustrates an impressive potential: developing only 5% of the total quarry surface area with photovoltaic installations would produce 4% of national energy needs.
Promoting responsible practices for sustainable development of the sector
UNICEM Entreprises Engagées, a non-profit association created under the 1901 law under the auspices of UNICEM, works for the continuous improvement of environmental and societal practices of companies in the quarries and construction materials sector. Its objective is clear: to promote sustainable development of the profession by relying on the Cap Environnement and Label RSE progress approaches. Today, nearly 1.800 sites are involved in these approaches, representing more than 50% of the profession's annual production volume: 725 concrete plants and 764 quarries are RSE-labeled, and 413 quarries have joined Cap Environnement.
In 2025, UNICEM and UNICEM Entreprises Engagées will continue their efforts to obtain formal recognition from the State for the UEE CSR Label and other sectoral CSR labels validated by independent third-party organizations. Aware of the major challenges represented by the CSRD (Corporate Sustainability Reporting Directive) and having long been mobilized in favor of CSR, of the intersections between the UEE CSR Label and the requirements of the European CSRD directive, UNICEM and UEE are working to raise awareness and support companies in the implementation of this regulation, thus strengthening their commitment to sustainability and social responsibility.
Training today's talents and anticipating tomorrow's skills
UNICEM Campus is the national training organization of UNICEM, dedicated to the professions of the construction materials sector. Its offer, accessible via apprenticeship and continuing education, meets the specific needs of professionals in the sector. Spread over three regional campuses – Montalieu-Vercieu (AURA), Bessières (Occitanie) and Louvigné-du-Désert (Brittany) – UNICEM Campus trains nearly 1.200 apprentices and trainees each year. The training covers a wide range of professions: operation and maintenance of public works and quarrying machinery, stone cutting in campuses of excellence, geology, production and quality of construction materials, as well as digital modeling and the profession of land surveyor.
In a proactive approach to prepare for the future of the profession, UNICEM Campus will expand its offering in 2025, with new training courses, particularly on quarry management. Constant monitoring, carried out in partnership with the CERC and the Observatoire Compétences Industries, makes it possible to publish regional and national studies each year on activity, employment and training in the materials industry. In addition, prospective work, conducted with the Observatoire Compétences Industries, anticipates the skills required by 2030. These analyses are summarized in the “Skills 2030” study, regularly updated to support the development of the sector and strengthen its attractiveness.
[1] Source: OFGL, “The scale of current local investments” – Cap sur… Collection No. 25 – October 2024
Illustrative image of the article via Depositphotos.com.