25,000 new intermediate French housing projects over five years

The recently lagging construction industry in France has been given a much needed boost by François Hollande who announced on announced Monday, Sept. 15, that €1.9 billion would be put towards 25,000 intermediate French homes within the next five years.

The announcement was given at the Investment Foundation event held in the Elysee Palace and the money is set to be spent in intermediate housing which is deemed as property called as midway between social housing and the private market. The money will be provided by both the State and the Caisse des Depots (CDC).

The investment programme will be operational from 1st January”, said the President and it is hoped that it will boost housing construction, which fell sharply since the beginning of the year.

In detail it said that “the state will use the proceeds of sales of companies of which it is a shareholder to invest a billion euros in the construction of [the] housing “, said the Head of State.

A MEASURE FOR MIDDLE CLASSES

The announcement was welcomed by Ingrid Nappi-Choulet, Professor of real estate and sustainable development at ESSEC. “This is very good news for the construction industry,” she said. The measure is particularly relevant for the middle classes who are finding it increasingly difficult to stay in ‘tension zones’ and do not have access to social housing ” . The so-called “tight” areas are agglomerations (we count 28) of more than 50,000 characterized by a lack of homes for sale, and where rents are steadily increasing.

But some professionals have tried to provide balance to the scope of the measure: “5000 additional dwellings per year, this represents an increase of only 1.7% of housing built in France” , calculates Puybouffat Hervé, President of the promoter Tagerim. ” Money put on the table is only EUR 76 000 per dwelling. Even without taxes, it is not enough to buy a home in a tension zone. Few developers are willing to sell at that price. ”

Norbert Fanchon, chairman of real estate developer Gambetta, is equally critical: “Rather than proceed with a dusting that will have little impact on the housing market, it would have been wiser to engage quickly in a virtuous circle greatly lowering VAT for those who engage in home ownership.”