You may be thinking, ‘What false promises is the French President making?’. Amongst issues such as increasingly priced student rent and the Governments blind eye towards the changes in modern French society, France’s failure to take responsibility for the problems at hand is dealing with the consequences across the whole country. For example, The Paris Metropolitan area has been experiencing real estate drops of up to -30%. But what can you do to help? Is there any way to make these issues more mainstreamed so the Government can take accountability?

WAS IT PREDICTABLE?

The extent of this crisis is, as previously mentioned, the Governments fault by quite a large mile. It was ultimately predictable. France does not have enough available housing to keep pace with the fast changing society – due to government procrastination. As a result of the lack of political action, rising interest rates are restricting the availability of mortgages and reducing the number of potential buyers. This considerably weak demand is therefore weighing on the prices and fluidity of transactions. In addition, the French government continue to favour urban sprawl over densification, which restricts potential buyers and students looking to rent housing in busy areas because of the lack of suitable buildings.

Much of France’s society has drastically changed, such as:

• A spike in population growth.
• Households splitting apart.
• An increase in undergraduate students travelling to France to study.

If the government noticed these changes much earlier, the real estate sector would be in more positive circumstances. Yet, the political ignorance has left real estate investments to fall by 54% in the first nine months of 2023, 55% lower than the average of the last five years.

Despite the clear issues, many wonder if the government will change their traditional ways. A few years ago, an objective was set by the Conseil National de la Refondation (The French Housing Renewal Council) to “Give the French the power to live again.” This housing decline has and will continue to leave France feeling powerless until amendments are made, which leaves the public anticipating positive government change.

THE EXTENT OF THE CRISIS

The real estate concerns have spiralled drastically over the past year, with many additional statistics to prove it. Interest rates have risen from 1.03% in October 2021 to 4% in May 2023. The real estate sector represents 13.3% of France’s GDP, and the sharp drop in sales due to high interest rates have left the public difficulty with obtaining credit. In recent years, housing struggles have been evident all across Europe’s richest countries – with France’s construction of new housing falling to levels not seen since 2010. Even some of the most well known French banks are showing signs of concern!

François Gilleroy de Galhau – Governor of the Bank of France – recently urged commercial banks to make it easier for consumers to borrow loans for housing and rent payments. Consumers at the moment are faced with inflation and unaffordable mortgages, leaving real estate industries to become desolate and quiet. As well as Galhau’s message towards commercial banks, the French government and ECB have claimed to the public that there’ll be no more interest rises.

Whilst this can be viewed as an improvement, 38% of French consumers who were considering a real estate project have either cancelled or postponed their plans. Obtaining loans are remaining to be increasingly difficult, with commercial banks being unco-operative and refusing to hand over the needed amount to consumers.

But what long term effects will this have on the industry? The young population and first time buyers will stop consuming, leading to an inability to accumulate wealth. Rapid urbanisation of large cities will leave interest rates high for years to come. Yet, there are solutions – Investing in housing would provide affordable options for low-income individuals and reduce high waiting lists.

HOW HAS THIS AFFECTED UNIVERSITY STUDENTS?

The disregard towards student accommodation in France is also a large concern. Around 6% of pupils live in university housing, many others being forced to live at home or rent city-centre studio flats in the overpriced and oversubscribed private sector, leaving many others to search for more affordable options.

Since the COVID lockdowns, there has been a boom in students finding cheaper and more spacious accommodation on farms, despite needing to travel a further distance to classes. For farmers struggling on low-incomes and pensions, it is also seen as a way of preserving France’s small scale agriculture.

France’s first organisation to match students to farm accommodation began in mid 1990s, when universities were decentralised to areas without housing. Campus Vert, now run by Odile Colin, has expanded rapidly across France and become increasingly popular. 500 units are already up and running, as well as 100 more buildings currently being renovated from old farm houses. Many students see this as a beneficial alternative in comparison to the high interest rates in dense areas. Yet, whilst it’s given most students a cheaper place to stay, they still have to car-share or use bikes to attend their lessons since the farms are a larger distance away.

What doesn’t help students is President Macron, as mentioned in the 2023 French Reforms, promised to build 60,000 new accommodations in cities. However, no renovations have materialised.

Overall, the farms are a relatively good idea, as it helps poorer pupils and increases farming agriculture. But, it should be the governments responsibility to house students in cheaper, and local housing – due to the shortage of purpose-built accommodation for the rising number of university undergraduates.

WHAT CAN THE FRENCH GOVERNMENT DO?

Overall, the lack of awareness from the government has completely restricted the changes which can be made. President Macron’s false promises towards students and the real estate sector have taken a toll across the country. Students having to take longer journeys and house prices falling by 3% over the past year, are a number of examples of the struggles within the real estate branch. If France is able to adapt to society and begin to strengthen tenant protection and promote sustainable urban planning, the government can create a beneficial society and enhance the populations well-being.