A new plan to revive the French real estate sector

parisian property

The Prime Minister, Manuel Valls, announced yesterday during an interview in Paris, measures to boost housing construction, in the face of new home starts falling to 312,000 at the end of twelve months to May, an all time low for the construction industry.

Rise of the zero-interest loan

One of the priorities of the government to boost home ownership and the French real estate sector as a whole has been the introduction of zero-interest loans, on a very limited basis. “These new loans will be available from October 2014 and more households should be able to benefit [than originally planned],” said Manuel Valls in the the ‘Parisien’ newspaper.

The zero-interest loan is for people, means-tested, who intend to acquire the title of their first residence, a new home which must observe a certain level of energy performance.

The government has decided to raise the ceiling for this initiative extending it to existing homes as well, subject to renovations and only in certain town centres within rural areas. A couple living in an area where the market real estate is tight and earning 2,250 euros per month will be able to borrow €49,000 on 0% instead of the €43,500 they are able to borrow right now. The repayment of the loan will begin after seven years rather than five.

But not everyone agrees with the move. “Once again it is a display,” says Jean-François Buet, president of the FNAIM. “To me this seems disconnected from reality; young people looking for work tend to go to large cities rather than buy in the centre of a town.”