France: prospects for the real estate market until 2017

France: prospects for the real estate market until 2017

The Ministry of Housing has set a goal to France until 2017 to build 500,000 new homes per year. Program will be difficult to perform because of the crisis, but the government intends to stick to the plans, reports Capital.fr.

"We want to maintain this goal, despite the fact that during the crisis it seems very ambitious," said in an interview with Reuters Cecile Duflot, French Minister of Housing. "Of course, this goal will be difficult to achieve, but this is exactly the number of properties that must be built to meet the needs."

The construction of new houses (laying the foundation) decreased by 11.2% in the first quarter of 2013 compared to the same period in 2012. Experts in France said that number of new buildings may fall in the current year to less than 300,000. Such a scenario didn't exclude Cecile Duflot too.

The number of building permits in France increased by 5.5% in the first quarter of 2013. According to the minister, this is a good sign. "The construction industry is in crisis, but there has been the first sign that symbolizes improvement," said Cécile Duflot.

To keep the housing crisis, the Minister proposes to place in the rental market more than 1 million of free accommodation. But specific terms are not specified. Number of vacant dwellings in France, not including second homes, is estimated at 2.5-3.5 million.

To stimulate the rental market, the government increased the tax on the use of unused housing. On January 1, the tax is applied to almost thirty cities population of over 50,000 inhabitants. It covers lodging, free for more than 1 year (instead of two years, as before). The tax amounts to 12.5% of the rent for the first year and 25% in the second year, instead of 10% and 12.5%, respectively, and 15% from the third year.

Cecile Duflot is going to change this tax, and it will differentiate not the number of residents in each locality, but estimates of the rental potential of regional information centers that will be established by the end of 2013.

The government also relies to transform unused office space to the living space - in France there are about 5,000,000 unused sq.m. The minister assured that the cost of such transition can range from €1,000 to €4,000 per sq.m.