French housing starts fell 3.9 percent in the second quarter from a year earlier, data showed on Tuesday, signalling further cooling in the housing market despite a tax cut for homeowners that is set to become law.
French housing construction has been slowing in recent months in step with rising eurozone interest rates, after a decade-long rally that lasted until 2005 and saw average home property values nearly double.
A bill giving tax exemptions for mortgage payments, put forward by President Nicolas Sarkozy as a way to encourage home ownership, has been passed by both houses of parliament and awaits a final rubber stamp.
The law will allow households to deduct 20 percent of mortgage interest rate repayments for five years, with an annual cap set at 3,750 euros for a single person and 7,500 euros for a couple. Analysts expect the measure will boost activity in the housing market but question whether it will be able to offset a larger downward trend from the past rally.
According to figures from Deutsche Bank, home ownership levels in France are around 56 percent, compared with almost 70 percent in Britain and around 43 percent in Germany.
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