Thursday, July 31, 2014

Housing Market in France in ‘Meltdown’ After Hollande Rent Caps

File under: Mad economic regulation

Housing starts in France fell 19 percent in the second quarter from a year earlier, and permits -- a gauge of future construction -- dropped 13 percent, the French Housing Ministry said yesterday.

Bloomberg reports, the rout stems from a law this year that seeks to make housing more affordable by capping rents in expensive neighborhoods. The law boosted the number of documents that must be provided by sellers, leading to a decline in home sales and longer transaction times.

“Construction is in total meltdown,” said Dominique Barbet, an economist at BNP Paribas in Paris. “It’s difficult to see how the new housing law is not to blame.”

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