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New measures announced to help real estate sector in France

Reuters/Jensen Fergus

French Prime Minister Manuel Valls unveiled a series of measures on Friday to boost the real estate sector in France, in an aim to kick-start the struggling economy.

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During his speech on Friday, Valls said that he wanted to create a climate of confidence in every sector, and that this was especially needed in public works and housing.

Construction is a clear weak spot in France's economy. The construction of housing dropped over 10% in the last twelve months to just over 300,000, while the government wants to achieve a target of 500,000.

The measures Valls announced include tax incentives for investors, a cap on rents as well as the choice of letting property for six, nine or twelve years instead of the nine years that exists today.

But analysts were sceptical about how effective these measures will be in a sector that is slow to react to such announcements.

Jean Joseph Boillot, an economist based in Paris told RFI that instead of simplifying policy, the government has made it more complicated.

“I’m afraid these measures are not really enough to solve the big problem of housing for the young generation in France. Simplification, as everyone knows, is the golden rule for improving the French economy, and if you look at the details, they have complicated the system… I think France is trapped in a labyrinth.”

Among the new measures, rent control will be applied not only to Paris but will be extended elsewhere in France if the results of the experiment are successful.

But Boillot told RFI: “The problem in France is that too many flats are too expensive. The prices for housing are 30 percent too high so the young generation cannot actually accommodate themselves.”

Manuel Valls has angered the left with his pro-business policies, with some critics saying he is becoming increasingly right wing.

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