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[PARIS] Sales of new homes in France are rebounding as investors return to the market, but the recovery has yet to end a homebuilding slump that is weighing on growth in the euro zone's second-biggest economy.
The Housing Ministry said this week that new homes sales had jumped 22 per cent in the second quarter, the highest since late 2009, when the economy was emerging from a deep recession after the financial crisis.
The recovery has manifested itself since the end of last year after the government eased taxes on housing investment and scaled back rent control plans to cover only Paris and the northern city of Lille.
Sales to investors aiming to rent out houses jumped 66 per cent in the first half of the year. Those to aspiring homeowners rose only five percent, despite record low mortgage rates, according to the FPI property developers federation. "Investors are reassured that rent controls, which were causing uncertainty, have been abandoned everywhere other than Paris and Lille," FPI president Alexandra Francois-Cuxac told a news conference.
Investors' return to the market is good news for property developers like Bouygues, Kaufman & Broad and Nexity. "We can see the upturn in home sales in a big way at Bouygues Immobilier," said Martin Bouygues, chief executive of construction to telecoms conglomerate. "Nonetheless, between the moment when we make a sale and it translates into a housing start, it can take at least a year, so the effect won't be felt until mid-2016," Bouygues said, presenting his group's half-year results to reporters.
Though new home sales are surging, homebuilding remains in a slump with the latest new housing starts data from June showing a drop of more than seven percent.
That means construction, which accounts for more than eight per cent of private-sector jobs, remains an economic weight holding back overall investment in the second quarter, according to figures from the INSEE statistics agency earlier this month.
INSEE's monthly survey of the sector found fewer builders expected business to fall in the coming months, but its overall indicator for the industry remained close to a record low.