Dive Brief:
- Reviving the construction sector could help pull France from its deepening economic slump, French Prime Minister Manuel Valls said last week.
- To that end, Valls announced he will back away from enforcing the planned caps on rents landlords can collect and instead will offer tax rebates on land sales to encourage property development. The announcement came two months after Valls promised to reduce the amount of red tape surrounding new home building and to make it easier for builders to get interest-free loans.
- Valls said his plan will bolster public confidence in the housing sector, but detractors accused him of catering to pressure from the business community.
Dive Insight:
French economists warn that even with these concessions to the country’s troubled housing industry, the economy, which has stagnated since early this year, will not improve quickly. After beginning to rebound from its six-year economic crisis, much of Europe is struggling with a second downturn.
It isn't surprising that Valls is making a big push for housing development as the sector is one of the biggest drags on the French economy. As the Wall Street Journal points out, French housing starts have fallen 10% over the last 12 months, and the number of starts is a staggering 67% off the government's stated goal of 500,000.