Housing sector picks up in second quarter

French government data released this Tuesday shows that the housing sector has started to recover in France, with sales of new homes during the second quarter of 2009 rising by almost 30% from a year earlier.


The French government released figures this Tuesday showing that new house sales have sharply increased in the second quarter of 2009.


Data reveal about 28,000 new homes were sold between April and July of this year, a 29.7% increase from the same period in 2008.


“This reflects a first step toward rebalancing the market”, state secretary for housing Benoist Apparu told the AFP.


A French analyst quoted by Reuters, Alexandre Mirlicourtois, said zero-interest loans and tax breaks had encouraged reluctant investors to explore the housing market.


An increase in sales has translated into a slender rise in properties’ market value. According to government data, apartments' average market value per square metre rose from 3,268 euros to 3,369 euros, while a house's average price notched up to 247,400 euros from 234,800 euros.


But while the sales data looks encouraging, the government also noted a 30% decrease in new construction permits for the second quarter of the year, compared to the same period in 2008.


Indeed, Mirlicourtois advises caution: “It would be an illusion to think that the house market will skyrocket as long as households' trust in a better economic future hasn’t returned. A decrease in interest rates matters precious little when compared with the prospect of losing one’s job”.

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