Hollande Announces Measures to Boost French Construction

French President Francois Hollande said his government set a goal of building 500,000 homes and renovating the same number annually by 2017 to meet growing demand after new construction dropped 20 percent last year.

Speaking today at a recently completed public-housing project near Paris, Hollande said the government will cut administrative obstacles to construction projects by speeding up approval processes, loosening zoning rules, offering some tax breaks and freezing housing standards for at least two years.

The value-added tax will be reduced to 5 percent from 7 percent for work on improving residential energy efficiency and families will receive as much as 1,300 euros ($1,588) for renovations, Hollande said.

About 340,000 new housing units were built last year and 150,000 upgraded. Families in France spend a bigger percentage of their salaries on housing than in neighboring countries, say French officials, who credit the lower cost of homes in Germany to greater wage moderation and mobility in that country.

Advisers to Hollande said the housing program will cost the government less than 1 billion euros a year.

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