Industry Focus >>歐盟新屋開工: 2023分析及2024展望

EU New Housing Starts:
2023 Analysis and Outlook for 2024
The housing market in the EU witnessed a blend of challenges andopportunities in 2023, setting the stage for a nuanced outlook in the
coming year. This analysis delves into the key trends that shaped the EU
housing landscape in 2023 and offers insights into what lies ahead in2024, with a particular focus on Germany and France, two pivotal markets
within the region.

Navigating the Waves: Assessing theVaried Currents of 2023
The year commenced with a sense of cautious optimism,
notably in Germany, the EU's economic powerhouse.
Early indicators suggested a modest uptick in construction
permits, hinting at potential growth opportunities. However,this upward trend was not uniformly observed acrossthe EU. A significant factor contributing to the subdued
growth was the swift escalation in interest rates. After
years of historically low borrowing costs, the European
Central Bank (ECB) embarked on a tightening cycle tocounter inflationary pressures. This surge in interest
rates adversely impacted mortgage affordability,
particularly for first-time homebuyers, potentiallydampening the demand for new housing units acrossthe EU, including in France, another major market.

Beyond Interest Rates: A
Multifaceted Challenge

Hardware & Fastener Components - no.62/2024

Germany:
Market Dynamics: Germany's housing market is characterized
by a s trong demand for af for dable housing, par ticul ar ly
apartments. This demand is driven by a growing urban population,with an estimated 87% of Germans living in urban areas 1.
Additionally, Germany has a large aging population, with over 28% of
the population aged 65 or above2. This demographic requires accessible
and affordable housing options. However, rising construction costs and ashortage of skilled labour pose challenges for developers. Construction
costs in Germany increased by 17.6% year-on-year in the third quarter of20233.
Government Initiatives: The German government has implemented
policies to address affordability concerns:

Several additional factors compounded the slowdown in
new housing starts in the EU:•Rent control: In some cities, rent increases are capped to a
specific percentage above the local rent index.

Supply Chain Disruptions: O ngoi ng global
supply chain disruptions continued to reverberate
across the construction sector, causing shortagesof essential building materials and skilled labour.
These disruptions led to project delays and escalated
construction costs continent-wide.

•Tax breaks: First-time buyers can benefit from tax breaks onproperty purchases, such as a reduced value-added tax (VAT) rate
on renovations.

•Focus on energy efficiency: The German government offers
subsidies and incentives for developers to construct energyefficient buildings, promoting sustainability in the housing market.

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Main Markets in Focus: Germany and France••

Geopolitical Uncertainty: The conflict in Ukraine
and broader geopolitical tensions cast a shadow of
economic uncertainty, denting investor confidence
and prompting developers in Germany and France toadopt a cautious stance.
Disparities in Housing Demand: Housing needs
varied significantly across the EU. While Germany
grappled with a shortage of affordable housing,particularly in major urban centres like Berlin andMunich, France contended with an oversupply ofvacation homes in rural areas. This disconnection
between supply and demand further complicatedmarket dynamics in both countries.

惠達雜誌France:
Market Dynamics: The French housing market is more diverse,with a mix of urban and rural properties. While demand remains
strong in major cities like Paris, affordability concerns are rising.
A 2023 study by the Notaires de France, a national association of notaries,
revealed that the average price per square meter in Paris reached a record
high of €10,600 (US$11,233).
Additionally, there's an oversupply of vacation homes in some rural
1.

Statista (2023). Share of urban population in Germany from 1950 to 2023. https://www.statista.com/statistics/1056970/
urbanization-in-germany/

2.

The World Bank (2023). Population 65 and over, total (% of total population) - Germany. https://data.worldbank.org/
indicator/SP.POP.65UP.TO.ZS?locations=DE

3.

Destatis Statistisches Bundesamt (Federal Statistical Office of Germany) (2023). Construction price index - Germany.
https://www.destatis.de/EN/Themes/Economy/Prices/Producer-Price-Index-For-Industrial-Products/_node.html

Industry Focus >>demand in both Germany and France.

areas. According to INSEE, the French National Institute ofStatistics and Economic Studies, there were over 600,000 vacantsecond homes in France in 2022.

•Policy Support: Several EU member states, including
Germany and France, are rolling out measures to addressaffordability concerns, potentially injecting momentum
into the market.

•Emphasis on Sustainability: There is a g rowing
emphasis on sustainable construction practices acrossthe EU. This trend could incentivize developers toprioritize energy-efficient housing solutions, appealing toenvironmentally conscious buyers and curbing long-term
operating expenses for homeowners.

Government Initiatives: The French government has also
introduced measures to address affordability:
Tax breaks: First-time buyers can benefit from tax breaks
on property purchases, similar to Germany.

•Social housing projects: The government invests in thedevelopment and maintenance of social housing units,providing affordable options for low-income residents.

•Renovation focus: T here's a g row i ng emphasis on
renovating existing housing stock to improve energy
efficiency. The government offers grants and tax credits
to encourage homeowners to undertake energy-efficientrenovations.

Key Differences
While both Germany and France face challenges in their housing
markets, some key differences exist:•Demand Focus: Germany grapples with a shortage ofaffordable housing, particularly in urban areas. France,on the other hand, has a more diverse market with both
affordability concerns in major cities and an oversupply
issue in specific rural segments.

•Policy Focus: Both countries offer tax breaks for firsttime buyers, but Germany additionally utilizes rent control
mechanisms in some cities. France places a stronger
emphasis on social housing projects to address affordability.

Looking at the Future
Despite the current challenges, both Germany and France arelikely to see a continued focus on:•Affordable Housing Solutions: Government initiatives
and developer strategies catering to specific needs intheir respective markets will be crucial for ensuring
housing accessibility.

•Sustainable Construction: The emphasis on energyef ficient buildings and renovations is likely tocontinue, driven by rising energy costs andenvironmental concerns.

•By adapting to these trends and addressing affordability
concerns, Germany and France can work towards a morebalanced and sustainable housing market in the future. Signs
of Resilience: Underlying Demand and Policy Initiatives.

Despite the prevailing headwinds, there are glimmers of hopefor the EU housing market, including Germany and France, as it
transitions into 2024. Here are some notable trends to monitor:•Demographic Imperatives: Demographic shifts within
the EU underscore a sustained, long-term demand for
new housing units. Population growth, particularly inurban hubs, coupled with an aging populace necessitating
accessible housing solutions, will continue to underpin

Industry Projections for 2024:
Navigating a Dynamic LandscapeIndustry experts offer nuanced perspectives on the EU housing
market's trajectory in 2024. While a full-fledged recovery may
remain elusive in the near term, certain segments, particularly
in Germany and France, could witness renewed stability andgrowth. Here's a breakdown of key forecasts:•Segmental Variations: The luxury and high-end housing
segments are anticipated to remain relatively resilient,buoyed by sustained demand from discerning buyers inboth Germany and France. However, the affordable housing
segment might face more pronounced challenges due toescalating costs and financing constraints.

•Continued Emphasis on Renovation: Renov ation
and refurbishment endeavours targeting existing
housing stock are poised to gain prominence in 2024,
encompassing both Germany and France. This trend isdriven by various factors, including:Energy Efficiency Imperatives: Escalating energy
expenses and mounting environmental concerns haveamplified the focus on enhancing the energy efficiencyof buildings. Renovation projects aimed at upgradingi n s u lat ion , w i ndows , a nd he at i ng syst e m s of fe r
compelling cost-saving opportunities for homeowners.

Sluggish New Construction: A potential deceleration in
new construction activities could pivot attention towards
renovation initiatives, particularly in locales characterizedby aging housing stock in need of modernization.

Regional Dynamics: Market performance is expected todiverge across different EU member states.

Conclusion
The EU housing market, with a spotlight on Germany andFrance, stands at a crossroads in 2024. While challenges abound,
underlying drivers of resilience and adaptability offer grounds forcautious optimism. By zeroing in on bespoke housing solutions,sustainable practices, and fostering an environment conduciveto economic stability, stakeholders can play a pivotal role innurturing a balanced and sustainable housing ecosystem in theyears ahead.
Copyright owned by Fastener World / Article by Behrooz Lotfian惠達雜誌Hardware & Fastener Components - no.62/2024•075