NAfter filling all the vacant ministerial positions last week, France's new Prime Minister Gabriel Attal wants to deliver. “There will be no time off,” he announced in Sunday’s edition of Le Parisien, reiterating his political priorities for the coming months. In the short term, this includes frontline measures to create more (affordable) living space and stimulate the purchase of home ownership.
As in Germany, the combination of sharply increased loan interest rates and high inflation has also been affecting the French real estate market for months. The transaction volume for existing apartments fell by around 20 percent in 2023. That's why he's counting on the banks, said Attal. They have committed to introducing a “system for checking unapproved real estate loans” in order to support households and limit cases of unjustified loan refusals.
From the point of view of many French people, what is particularly worrying is not so much the difficult purchasing environment, but rather the tense situation on the rental property market. “Rental apartments are becoming increasingly rare in France,” writes the real estate portal “seloger.com” in a recent balance sheet for 2023. The supply has shrunk by no less than 36 percent within two years – while demand is growing at the same time. The result is a housing shortage and rising rents.
“Significantly simplify standards”
The sharp decline in rental apartments is partly explained by the high loan interest rates. They force many first-time buyers to cancel their purchase project and stay in their old apartments. But the ban on new rentals of apartments with poor energy efficiency (G+), which came into force in France in 2023, and the upcoming Summer Olympics are also apparently leaving their mark on the rental housing market and limiting the available supply.
The figures from Paris, where the situation on the rental housing market is most critical, provide an indication of this. According to “seloger.com”, advertisements there have fallen by 74 percent within three years. The portal suspects “Paris-specific phenomena”. More than a third of the apartments in the French capital are old buildings with very poor energy efficiency. In addition, the Summer Olympics boosted seasonal rentals, meaning apartments were taken out of the regular rental market.
In his government statement to the National Assembly at the end of January, the French Prime Minister had already announced quick answers to the housing crisis and, in collaboration with local elected officials, promised a “supply shock with several immediate solutions”.
“We will greatly simplify the norms,” said Attal. Among other things, the energy efficiency classes will be revised and access to state aid for energy-related renovations will be simplified. They will also “not hesitate to confiscate empty buildings, especially office buildings.” Attal received criticism in particular for his proposal to make social housing in cities more accessible to the middle class.
Environment Minister Christophe Béchu took the first concrete actions on Monday. He also announced in “Le Parisien” that the calculation of energy efficiency classes for very small apartments would change because hot water consumption there had a distorting effect on the classification. 140,000 apartments with less than 40 square meters should no longer be classified as “energy guzzlers” with labels F or G.
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