December 19, 2017 / 11:01 AM / a year ago

French builders see 2018 slowdown for country's construction sector

PARIS (Reuters) - Growth in the French construction sector will slow down next year because of curbs on government measures supporting the industry and due to property prices becoming more expensive, the French building federation (FFB) said on Tuesday.

Construction activity in France - home to companies such as Bouygues (BOUY.PA), Vinci (SGEF.PA) and Eiffage (FOUG.PA) - is seen slowing to 2.4 percent in terms of growth in volumes in 2018, down from an expected 4.7 percent this year.

“Despite a decline in housing starts of some 10,000 units due to the finance law, housing will continue to grow but at a more measured pace,” Jacques Chanut, head of the FFB body, told a news conference.

Measures such as the so-called ‘PTZ’ scheme of interest-free loans for first time buyers, or the Pinel tax breaks for home buyers renting their property, helped support the French construction market both in 2017 and in 2016, when it grew by 1.6 percent following eight years of recession.

The building sector - excluding infrastructure projects - accounts for around six per cent of national output, employing more than 1 million people.

France’s economy is forecast to expand by 0.5 percent in the fourth quarter, maintaining a steady pace of growth from the previous three months, the country’s central bank confirmed in a second estimate last week.

The business sentiment indicator for the construction sector also rose to 104 points in November from 103 in October, reaching its highest point since December 2007.

However, the Bank of France added last week that household investments, made up primarily of new home purchases, would ease back in 2018 after surging 5.1 percent this year amid exceptionally low interest rates.

Reporting by Gilles Guillaume and Dominique Vidalon; Editing by Sudip Kar-Gupta

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